Question
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
Cost | Description |
$725,000 | Product development costs |
$475,000 | Materials handling costs |
$1,250,000 | Production line labor costs |
$450,000 | Production setup costs |
$250,000 | Power costs (for cooling beer and running equipment) |
$875,000 | Manufacturing facility management costs |
Using the manufacturing cost hierarchy, what is the total cost that would be classified as facility-level activity costs?
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