Cost Hierarchy Identification:

Identify whether each of the following costs most likely relates to a(n) (1) organization-sustaining activity, (2) facility-sustaining activity, (3) customer-sustaining activity, (4) product-sustaining activity, (5) batch-level activity, or (6) unit-level activity. For each item, explain your choice.

__________Receptionist salary

__________Financial forecasting software

__________Photocopy machine rental

__________Janitorial service

__________Audit manager salary

__________Long-distance telephone charges

__________Meal costs for entertaining clients

__________Costs of annual employee golf party

__________Office supplies, such as paperclips and tablets of paper

__________Annual subscription for income tax regulators

Cost Pools and Cost Drivers:

Following are lists of potential cost pools and cost drivers. Match each cost driver to the most appropriate cost pool. Use each cost driver only one. Explain your choice.

Cost Pool Cost Driver

__________Machining A. Number of employees

__________Purchasing activities B. Number of parts per unit

__________Inspection C. Kilograms of laundry processed

__________Assembly D. Number of invoices

__________Payroll E. Number of batches

__________A special quick-freezing process for food F. Number of machine hours

__________Laundry in a hospital G. Number of units