E4-2 (Static) Assigning Costs to Activity Cost Pools, Identifying a Cost Driver [LO 4-2, 4-3]

Name of Budgeted Cost	Budgeted Cost
Plant insurance	$	86,100
Testing raw materials		45,000
Manufacturing equipment setup		7,200
Quality inspections		57,000
Property taxes		23,000
Electricity, plant		14,000
Electricity, manufacturing equipment		51,250
Depreciation, plant		18,800
Depreciation, manufacturing equipment		36,700
Maintenance worker (manufacturing equipment)		22,500
Indirect labor (manufacturing equipment setup)		8,300
Design engineering		220,000

Required: 1. Assign each of the budgeted costs above to one of the following activity cost pools:

• Engineering
• Equipment setup
• Quality control
• Factory facilities
• Manufacturing equipment

2. Compute the total cost of each pool. 3. Indicate whether the activities in each pool are unit, batch, product, or facility level. 4. Identify the most likely driver for each cost pool from the following list:

• Number of inspections/tests
• Square feet
• Machine hours
• Engineering hours
• Number of setups

Use the following table to organize your answer. The engineering cost pool is done as an example. Other pools may have more than one cost item included.

Activity Cost Pool 1. Costs Included in Pool 2. Total Cost of Pool 3. Unit, Batch, Product, 4. Cost Driver or Facility $ 220,000 Product Engineering Hours Engineering Design engineering Equipment Setup $ 0 Quality Control $ 0 Factory Facilities 0 Manufacturing Equipment $