Classify each of the following costs as either unit-level, batch-level, product-level, or facility-level. a. Engineering costs for a new product b. Order processing c. Depreciation on factory d. Direct labor e. Shipment of an order to a customer f. Product line manager salary g. Machine setup costs that are incurred whenever a new production order is started h. Patent for new product pre help. Product-level Batch-level or Unit-level or Facility-level Facility-level Unit-level Unit-level Batch-level Batch-level or Facility-level Batch-level or Unit-level Batch-level or Unit-level or Facility-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level all

Classify each of the following costs as either unit-level, batch-level, product-level, or facility-level. a. Engineering costs for a new product b. Order processing c. Depreciation on factory d. Direct labor e. Shipment of an order to a customer f. Product line manager salary g. Machine setup costs that are incurred whenever a new production order is started h. Patent for new product pre help. Product-level Batch-level or Unit-level or Facility-level Facility-level Unit-level Unit-level Batch-level Batch-level or Facility-level Batch-level or Unit-level Batch-level or Unit-level or Facility-level Facility-level Facility-level or Product-level Facility-level or Unit-level Product-level Unit-level all

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Classify each of the following costs as either unit-level, batch-level, product-level, or facility-level.
a. Engineering costs for a new product
b. Order processing
c. Depreciation on factory
d. Direct labor
e. Shipment of an order to a customer
f. Product line manager salary
g. Machine setup costs that are incurred whenever a new production order is
started
h. Patent for new product
ore help
Product-level
Batch-level or Unit-level or Facility-level
Facility-level
Unit-level
Unit-level
Batch-level
Batch-level or Facility-level
Batch-level or Unit-level
Batch-level or Unit-level or Facility-level
Facility-level
Facility-level or Product-level
Facility-level or Unit-level
Product-level
Unit-level
all

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Step 1: Define batch level activities

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A manufacturer reports three activities: assembling components into products; product design; and sales order processing. Determine whether each of the following cost drivers relates to assembly, design, or order processing. Cost Driver 1. Direct labor hours to assemble components 2. Number of design changes 3. Number of components assembled 4. Number of design hours 5. Number of shipments made 6. Number of sales orders processed Activity
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