Question

LO 5-2 Exercise 5-2B Identifying appropriate cost drivers Required Provide at least one example of an appropriate cost driver (allocation base) for each of the following activities a. Engineers design a product production layout. b. Engineers set up machines to produce a product. c. The production supervisor completes the paperwork initiating a work order. d. The production manager prepares materials requisition forms. e. Workers move materials from the warehouse to the factory floor f. Assembly line machines are operated. g. Workers count completed goods before moving them to a warehouse. h. A logistics manager runs a computer program to determine the materials release schedule. i. Janitors clean the factory floor after workers have left. j. Mechanics apply lubricant to machines.

Answer 1

SOLUTION

Activities	Cost drivers
Engineers design a product production layout	Number of designs
Engineers set up machines to produce a product	Number of set up made
The production supervisor completes the paperwork initiating a work order	Number of papers used
The production manager prepares materials requisition forms	Number of material requisition forms made
Workers move materials from the warehouse to the factory floor	Number of moves
Assembly line machines are operated	Number of operations
Workers count completed goods before moving them to a warehouse	Number of units completed
A logistics manager runs a computer program to determine the materials release schedule	Number of times a program is runned
Janitor cleans the factory floor after workers have left	Number of machine hours used
Mechanics apply lubricants to machines	Number of lubricants used