Professional Documents
Culture Documents
Cordless $ 78,000
29,250 ($6.30 x 36,000) + ($1.35 x 77,000) --Total mfg. costs $107,250 Units produced 10,000 Unit cost $ 10.73 =======
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Belring, Inc.
Activity Usage
Cordless Regular 100,000 $738,000 90,000 45,000 10 Total 110,000 $816,000 100,000 50,000 30
Units produced per year Prime costs Direct labor hours Machine hours Production runs
Number of moves
60
30
90
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Direct Tracing
Driver tracing
Driver Tracing
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Machining rate:
Testing rate:
$100,000/50,000 = $2 per MH
$80,000/100,000 = $0.80 per DLH
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Cordless $ 78,000
80,000 40,000 10,000 8,000 $216,000 10,000 $ 21.60
Regular $ 738,000
40,000 20,000 90,000 72,000 $ 960,000 100,000 $ 9.60
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8
Regular
$10.62 10.69
Activity rate
21.60
9.60
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Activity Categories
Unit-level Activities are those that are performed each time a unit is produced.
Examples: Power and machine hours are used each time a unit is produced. Direct materials and direct labor activities are also unit-level activities, even though they are not overhead costs.
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Batch-level Activities are those that are performed each time a batch of products is produced.
Examples: Setups, inspections, production scheduling, and material handling.
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11
Product-level (Sustaining) Activities are those that are performed as needed to support the various products produced by a company. These activities consume inputs that develop products or allow products to be produced and sold.
Examples: Engineering changes, and expediting.
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12
Facility-level Activities are those that sustain a factory's general manufacturing processes.
Examples: Plant management, landscaping, maintenance, security, property taxes, and plant depreciation.
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End of Chapter 4
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16