PROBLEM 4

Levels of cost drivers. Each of the following is a potential activity driver. Identify the most likely level of each driver with U for a unit-level driver, B for a batch-level diver, and P for a product-level driver.

1. Loads of materials moved
2. Materials cost
3. Pounds of finished product produced
4. Shipments to customers (where no finished goods inventory is maintained
5. Number of part numbers used
6. Machine hours
7. Purchase orders issued (where large materials inventories are maintained
8. Direct costs
9. Pieces inspected (where output is 100% inspected)
10. Pieces inspected (where only the first piece is inspected after each setup

Problem 5. Levels of cost drivers.

Each of the following is a potential activity driver. Identify most likely level of each driver with U for a unit-level driver, B for a batch-level driver and P for a product-level driver.

1. Pounds of materials used
2. Work orders
3. Direct labor hours
4. Total value added
5. Units produced
6. Machine setups
7. Design changes
8. Marketing promotions

Problem 6. Value-added and non-value added activities.Pleasantville Company's sole piece of machine housing made from sheet metal, is produced in the following steps:

Required: Identify each activity as value-added activity or non-value-added activity

1. Metal received and inspected at receiving dock
2. Metal moved to stores inventory
3. Metal placed into stores
4. Metal retrieved from stores as needed
5. Metal moved to Cutting Department
6. Metal placed in queue to await cutting machine
7. Pieces cut to size
8. Placed on hand truck to await material handler
9. Moved to Deburring Department
10. Placed in queue to await deburring
11. Sandblasted to remove burrs from cut edges
12. Placed on hand truck to await material handler
13. Moved to in-process storage area
14. Moved to Inspection Department
15. Placed in queue to await inspection
16. Inspected
17. Placed on hand truck to await material handler
18. Moved to in-process storage area
19. Moved to Drilling Department
20. Placed in queue to await drilling machine
21. Holes drilled to accommodate customer's fasteners
22. Placed on hand truck to await material handler
23. Moved to Deburring Department
24. Placed in queue to await deburring machine
25. Sandblasted to remove burrs from edges of holes
26. Placed on hand truck to await deburring machine
27. Moved to in-process storage area
28. Moved to Painting Department
29. Placed in queue to await painting
30. Painted and oven-dried
31. Placed on hand truck to await material handler
32. Moved to in-process storage area
33. Moved to Inspection Department
34. Placed in queue to await inspection
35. Inspected
36. Placed on hand truck to await material handler
37. Moved to shipping dock

Ref:

Cost Accounting

Topic: Activity Based Costing