- Requirements 1. Identify the cost hierarchy level for each cost category. 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. 3. Calculate the budgeted cost per unit of cost driver for each cost category. 4. Calculate the budgeted total costs and cost per unit for each product line. 5. Explain how you could use the information in requirement 4 to reduce costs. Print Done - Data table 303,800 461,700 Pumpkin Bags Budget for Costs and Activities For the Year Ended February 28, 2014 Direct materialspurses $ Direct materialsbackpacks Direct manufacturing labor-purses Direct manufacturing labor-backpacks Setup Shipping Design 93,000 97,200 114,400 72,400 168,000 249,000 Plant utilities and administration $ 1,559,500 Purses Total Total Other budget information follows: Backpacks Number of bags 6,075 Hours of production 1,555 Number of batches 150 3,100 9,175 2,595 4,150 50 200 Number of designs 3 3 6 Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows: (Click the icon to view the budgeted information.) Read the requirements. Requirement 1. Identify the cost hierarchy level for each cost category. Cost Direct materialspurses Cost Hierarchy Level Output unit-level cost Output unit-level cost Output unit-level cost Direct materialsbackpacks Direct labor-purses Direct laborbackpacks Output unit-level cost Setup Batch-level cost Shipping Batch-level cost Design Product-sustaining cost Facility-sustaining cost Plant utilities and administration Requirement 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. Cost Cost Driver Reason Direct materialspurses Direct materialsbackpacks Direct labor-purses Direct laborbackpacks Setup Shipping Design Plant utilities and administration Design Product-sustaining cost Facility-sustaining cost Plant utilities and administration Requirement 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver Cost Cost Driver Reason Direct materials-purses Direct materials-backpacks Direct labor-purses Direct labor-backpacks Hours of production Setup Number of backpacks Shipping Design Number of batches Plant utilities and administration Number of designs Number of purses Help me solve this Etex Type here to search Direct materials-backpacks Output unit-level cost Output unit-level cost Direct labor-purses Direct labor-backpacks Output unit-level cost Setup Batch-level cost Shipping Batch-level cost Design Plant utilities and administration Product-sustaining cost Facility-sustaining cost Requirement 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. Cost Cost Driver Reason Direct materials-purses Direct materialsbackpacks Direct labor-purses Direct labor-backpacks The cost is determined by the number of batches. Setup The cost is determined by the number of designs. Shipping Design Plant utilities and administration The cost is determined by the number of output. The more the machines are used the higher the cost. Help me solve this Etext pages Get more help IL Type here to search