Question

Various activities at Companhia de Textils, S.A., a manufacturing company located in Brazil, are listed below. The company makes a variety of products in its plant outside São Paulo. Required: Classify each of the activities as either a unit-level, batch-level, product-level, or facility-level activity. Activity Classification Activity a. Preventive maintenance is performed on general-purpose production equipment b. Products are assembled by hand. C. A security guard patrols the company grounds after normal working hours. d. Purchase orders are issued for materials to be used in production. e. Modifications are made to product designs. f. New employees are hired by the personnel office. g. Machine settings are changed between batches of different products. h. Parts inventories are maintained in the storeroom. (Each product requires its own unique parts.) i. Insurance costs are incurred on the company's facilities.

Answer 1

a). Preventive maintenance is performed on general purpose production equipment- Facility level activity because these activities are performed for general operation they are not inclined towards special or individual product and other specific things.so preventive maintenance is a general purpose function therefore it will come under this heading.

b). Products are assembled by hand-​​ product level activity because these activities are performed to maintain to assist is product formation

c).A security patrols the company ground after normal working hours- Facility level activity because patrols means act of walking around an area so that it can be ensured it is face as it is a general operation not related to any product.

d).purchased orders are issued for material to be used in production- Batch level activity because order is given for each and every batch of production then only purchase orders are issued.

e).Modification are made to Product design- Product level activity because includes actions undertaken to assist the product varieties or to improve the products so modification is also a slight improvement that why it will come under this.

f) New employees are hired by personal office- Facility level activity as this activity is related to general operations of the company.

g). Matching settings are changed between batches of different product- Batch level activity as resetting of particular batch will come under this head of activity.

h).Parts inventories are maintained in the store room- Facility level activity as it is related to the maintenance aspect which is general purpose.

i). Insurance cost are incurred on company facilities- facility level activity as this includes general operations not related to specific product so insurance cost incurred will be computed under this activity.

Activity Rate for each cost pool calculation

1. Labour related = Expected over head cost Expected activity Sap). = $22,000 8 00 Чрн) Чрек DLH Видиюля.

cost Activity reate = Expected over head Expected activity $3,000 order 3,000 $ 1 per order > Puechase 10 Loco - Material - 89 Reciepts 900 $ 10 Per receipt > Relay Assembly a siete 56 рее бlay |

at reate Activity - Expected overhead lost Expected Activity As per Question General faclory = $ 200,000 o 40,000 J$5 Per MHS Ans.