Required:

1.Identify each of the costs with the appropriate division: Operations, Sales, Administrative.

Operations

Sales

Administrative

(a) Depreciation on factory equipment.

(c) Depreciation on factory building.

(e) Assembly foreman's salary.

(h) Supplies for the Machining Department.

(j) Electricity for the Assembly Department.

(k) Lost materials (scrap) in a Machining Department.

(l) Direct labor in the Assembly Department.

(o) Packing supplies (I include this in the shipping dept.)

(r) Supplies for Production Scheduling.

(s) Cost of repairing parts improperly manufactured in the Machining Department.

(t) Paint for the Assembly Department.

(u) Heat, light, and power for the factory.

(q) Payroll fringe benefits for workers in the Shipping Department.

(d) Advertising manager's salary.

(f) Salespersons' salaries.

(g) Salespersons' travel expenses.

(i) Advertising supplies used.

(m) Supplies for the sales office.

(n) Sales commissions

(b) Depreciation on office equipment.

(p) Cost of hiring new employees.

(v) Leasing of computer equipment for the Accounting Department.

2.Identify each of the costs with one of the following:

(a)Unit-level activities. (c) Product-level activities.

(b)Batch-level activities. (d) Facility-level activities.

a.Organize these classifications by division: Operations, Sales, Administrative.

(a)Unit-level activities Operations Division Depreciation on factory equipment. Depreciation on office equipment. Depreciation on factory building. Lost materials (scrap) in a Machining Department. Cost of repairing parts improperly manufactured in the machining Department Supplies for Production Scheduling. Paint for the Assembly Department. Heat, light, and power for the factory.

(b)Batch-level activities. Sales Division Advertising Manager's Salary, Assembly's foreman's salary, Sales Persons Salaries, Sales Commissions

(c)Product-level activities. Administrative Division. Supplies for the machining departmentDirect labor in the assembly departmentpacking suppliesSupplies for the production scheduling

(d)Facility-level activities. Administrative Division Sales Persons' travel expenses Advertising supplies used Electricity for the assembly department Supplies for the sales office Payrol fringe benefits for workers in the shipping department. Leasing of computer equipment for the accounting department

(3)Specify an appropriate cost driver for tracing costs associated with the various levels of activities to the next cost objective or products, whichever is appropriate.

Cost drivers Unit Level Activities Batch Level Activities Total amount of units produced Direct labor Machine hours - Number of set ups Values of materials in a product Product Level Activities Facility - Level Number of products Number of Employees Volume of scrap - by weight or units Number of employees

(4)Glaser Health Products is interested in using activity-based costing to identify as many costs as possible with the products. These costs will be used for planning and control decisions rather than for inventory valuation. The controller decided that all operation costs will be related to products but only those sales and administrative costs that are classified as unit-level, batch-level, or product-level costs

https://www.accountingcoach.com/activity-based-costing/explanation

Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of machine hours. ... It then assigns the cost of those activities only to the products that are actually demanding the activities.

2.should be related to products. Using preliminary stage cost drivers, explain how individual items of costs will be traced to activity groupings.

3.Using primary stage cost drivers, show how the costs should be related to products.

4.Explain why it is necessary to use preliminary stage and primary stage cost drivers.

Cost Object

Divisions

Activities

Cost Driver

Depreciation on factory equipment

Depreciation on office equipment

Depreciation of factory building

Advertising manager's salary

Assembly foreman's salary

Salesperson's salaries

Salesperson's travel expenses

Supplies for the Machining Depart

Advertising supplies used

Electricity for the Assembly Depart

Lost materials (scrap) in a Machining Depart

Direct labor in the Assembly Depart

Supplies for the sales office

Sales commissions

Packing supplies

Cost of hiring new employees

Payroll fringe benefits for workers in the Shipping Depart

Supplies for Production Scheduling

Cost of repairing parts improperly manufactured in the Machining Depart

Paint for the Assembly Department

Heat, light, and power for the factory

Leasing of computer equipment for the Accounting Depart

Divisions:(O)perations, (S)ales, or (A)dministrative

Activities:(U)nit-level Activities, (B)atch-level activities, (P)roduct-level activities, or (F)acility-level activities

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