Question

Uffice Best Products produces a variety of office products including two models (standard and deluxe) of a hand-held stapler. A number of the company's activity related costs are described in the following table: UNIT- BATCH- PRODUCT FACILITY- LEVEL LEVEL LEVEL LEVEL DESCRIPTION OF COST Factory depreciation Direct materials Costs of ordering materials for the standard stapler product Engineering support costs Salary of the company CEO Direct labor Costs associated with setting up the machinery to produce a run of the deluste stapler model T Factory rent Inventory holding costs Costs of supplies used in production T T Required: Classify each of the above costs into unit, batch, product, or facility. level cost pools. 137

Answer 1

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Unit level cost means cost which are incurred every time when a unit is produced.
Batch level cost means cost which are incurred every time a batch of goods is produced.
Product level cost means cost which are incurred to support the production of each type of product.
Facility level cost means cost which are incurred to sustain the overall manufacturing process.
Description	Type
Factory Depreciation	Facility level
Direct Materials	Unit level
Costs of ordering materials for the standard stapler product	Product level
Engineering support costs	Facility level
Salary of the company CEO	Facility level
Direct Labor	Unit level
Costs associated with setting up the machinery to produce a run of the deluxe stapler model	Product level
Factory rent	Facility level
Inventory holding costs	Batch level
Cost of supplies used in production	Unit level