Reference no: EM132528014
Acme Enterprises is a custom manufacturer of specialty circuit boards. The boards are produced in batches in a single manufacturing facility. Each board requires an engineer to prepare the specifications and schematic drawings. Once this design is complete, the equipment is set up for the batch production. As each batch is completed, a sample of the units is inspected for quality and tolerances.
Costs have been assigned as follows:
Engineering................................. $75,000
Setups......................................... 60,000
Labor.......................................... 50,000
Inspection................................... 75,000
Factory lease............................... 30,000
Factory utilities........................... 12,000
The following activity drivers have been identified and their capacities determined:
Activity Driver Practical Capacity
Labor hours................................ 5,000
Setup hours................................. 2,000
Engineering hours....................... 2,500
Inspection hours......................... 6,000
Machine hours............................ 10,000
The costs of the facility-level activities are assigned using machine hours.
Required:
Question 1. Identify each activity as unit-level, batch-level, product-level, or facility-level.
Question 2. Create homogeneous cost pools. Identify the activities that belong to each pool and the activity driver that will be used for computing pool rates. (Use machine hours as the activity driver for the factory lease and factory utilities cost pools.)
Question 3. Compute the pool rate for each pool you have identified in Requirement 2.