8.47 {appendix} Estimating activity costs; assigning costs to activity centres: manufacturer Refer to Case C846. Assume that UB. Bright decided to implement an activity-based costing system that L08.13 Included all costs except direct material. She Identies the following costs, by cost category. for the past year and selects the following resource drivers: Cravings for Cakes Costs and resource drivers Cost category Cost Resource driver Wages $300000 Number of employees Building costs S0000 Floor spate Depreciation 100 000 Machine hours Consumables 50 000 Orders placed by centre Energy 400 000 Kilmvatt hours used Other 20 000 Number of employees Total 1&0 000 Next, Bright divides the company into the following activity centres: Precinct development Sales and dispatd] Mixing Filling Baking Packing and warehousing Administration Corporate management The resource driver usage by each activity centre, for the various COSI categories, follows. Cravings for Cakes Resource drivers consumed by activity centres Activity centre Product development Sales and dispatch Mining Filling Baking Packing and warehousing Administration Corporate management Total quantity of resource driver across all activity centres Required: Wages {employees} 5 10 15 20 i 5 20 10 Building imz} 200 500 500 1000 500 1000 l000 300 5000 Cost category {resource driver} Depreciation [machine hours} 1000 3000 5000 10000 Consumables {orders} 10 15 50 100 100 150 Ice He Energyr Other {kilowatt hours} {employees} 5 10 10000 15 10011} 21} 2000C!) 15 30000 20 - Iii _s 250000 100 1. Assign the costs to the activity centres using the resource driver consumption patterns shown above. 2. Why did UB. Bright use cost categories in her analysis? 3. Explain how she would have identied the cost categories. and give two examples of the costs likely to be included in each category. 4. Bright used the number of employees as the resource driver for wages. Can you suggest a more accurate basis for assigning wage costs to activity centres? 5. Can you suggest a more accurate basis than machine hours for assigning depreciation costs to activity centres