3-34 Activity Levels and Cost Drivers Tartan Manufacturing Company produces four lines of h lighting fixtures in a single manufacturing plant. Products are built to specific customer tions. All products are made-to-order. Management of the plant lists the following as the ke at the plant: a. Product design b. Production scheduling c. Cost of purchasing department d. Receipt and inspection of materials e. Machine set-ups f. Product inspection, done for each product g. Plant security h. Customer credit check i Machine operation j. Machine maintenance

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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3-34 Activity Levels and Cost Drivers Tartan Manufacturing Company produces four lines of high-quality
lighting fixtures in a single manufacturing plant. Products are built to specific customer specifica-
tions. All products are made-to-order. Management of the plant lists the following as the key activities
at the plant:
a. Product design
b. Production scheduling
c. Cost of purchasing department
d. Receipt and inspection of materials
e. Machine set-ups
f. Product inspection, done for each product
g. Plant security
h. Customer credit check
i. Machine operation
j. Machine maintenance
Required Identify a cost object and a cost driver for each activity.
Transcribed Image Text:3-34 Activity Levels and Cost Drivers Tartan Manufacturing Company produces four lines of high-quality lighting fixtures in a single manufacturing plant. Products are built to specific customer specifica- tions. All products are made-to-order. Management of the plant lists the following as the key activities at the plant: a. Product design b. Production scheduling c. Cost of purchasing department d. Receipt and inspection of materials e. Machine set-ups f. Product inspection, done for each product g. Plant security h. Customer credit check i. Machine operation j. Machine maintenance Required Identify a cost object and a cost driver for each activity.
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Cost object represents the overall cost of the company related to the product and service of the company. Whereas, cost driver represents the classification of consumed quantity by the company.

 

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