Which of the four activities is a batch-level activity? a Machining activity b General factory activity c Product design activity d Machine setups activity

Determine whether each item is a facility-level, product- or customer-level, batch-level, or unit-level cost. The Machining department uses a rate of $55 per machine hour, and the Assembly department uses a rate of $35 per direct labor hour. Describe the five steps required to implement activity-based costing.

Under traditional approaches, some idle capacity may be incorporated into the overhead allocation rates, thereby potentially distorting the cost of specific output. This may limit the ability of managers to truly understand and identify the best business decisions about product pricing and targeted production levels. Departments directly involved with producing which of the following is a batch-level activity? goods or providing services for customers. Departments that provide services to other departments within a company. Examples of committed fixed costs include investments in assets such as buildings and equipment, real estate taxes, insurance expense and some top-level manager salaries. Ms. Bentley owns a small department store in a metropolitan area.

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Setting up equipment. Training employees. Product‐line activities are those activities that support an entire product line but not necessarily each individual unit. Examples of product‐line activities are engineering changes made in the assembly line, product design changes, and warehousing and storage costs for each product line. Which of the following best defines a facility-level activity?

• For direct costs, accountants measure a product unit cost for each direct cost category.
• Advanced information and manufacturing technologies reduce the demands made on batch and product-sustaining resources in the production of customized, low-volume products.
• The ABC approach has the potential to provide managers with information they find more useful for costing purposes’.
• Allocating expenses to individual units sends signals that managers can easily misinterpret.

Computer Support allocates costs totaling $4,000,000 based on hours of computer support used by each production department. Personnel allocates costs totaling $2,500,000 based on number of employees in each production department.

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The single or plant wide rate is related to several identified cost drivers. Individual cost drivers cannot accurately be determined with respect to cause-and-effect relationships.

Unit-level activity. Organization-sustaining activity. Batch-level activity.