E4-8
Wilmington, Inc. manufactures five models of kitchen appliances. The company is
installing activity-based costing and has identified the following activities
performed at its
Mesa
plant.
1. Designing new models.
2. Purchasing raw materials and parts.
3. Storing and managing inventory.
4. Receiving and inspecting raw materials and
parts.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance
parts.
7. Manually assembling parts into appliances.
8. Training all employees of the company.
9. Insuring all tangible fixed assets.
10.
Supervising production.
11. Maintaining and repairing machinery and
equipment.
12. Painting and packaging finished
appliances.
Having
analyzed its Mesa plant operations for purposes of installing activity-based
costing, Wilmington, Inc. identified its activity cost centers. It now needs to
identify relevant activity cost drivers in order to assign overhead costs to
its products.
Instructions
Using
the activities listed above, identify for each activity one or more cost
drivers that might be used to assign overhead to Wilmington’s five products.
TUTORIAL PREVIEW
Activities
|
Cost driver(s)
|
1. Designing new models.
|
1. Number of engineering change orders; hours of designing
|
2. Purchasing raw materials and parts.
|
2. Number of orders processed
|
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