5-17 Coast Hierarchy;Teledor Inc. manufactures boomboxes (music system with radio, MP3, and compact disc player) for a different well known companies. The boomboxes differ significantly in their complexity and the batch sizes in which they are manufactured. The following cost were in incurred in 2018.Indirect Manufacturing Labour Cost such as supervision that supports direct manufacturing labour, $1,500,000.Procurement Cost of placing purchased orders, receiving materials, and paying suppliers that are related to the number of purchased orders placed, $800,000.Cost of indirect Materials $450,000.Cost incurred to set up machines each time a different product needs to be manufactured, $900,000.Designing processes, drawing process charts, making engineering process for products $900,000.Machine related overhead cost such as depreciation, maintenance, production, engineering, $1,200,000. these resources are related to the activity of running the machines.Plant management, plant rental, and insurance $950,000. Required:Classify each of the proceeding cost as output unit, batch level, product sustaining, or facility-sustaining. Explain your answers.Consider two (2) boomboxes made by Teledor Inc. \one boombox is complex to make and is made in many small batches. The other boombox is simple to make and is made to a few large batches. Supposed that Teledor needs the same number of machine hours to make either boombox. If Teledor allocated all overhead cost using machine hours as the only allocation base, how, if all, would the boomboxes be miscosted? Briefly Explain why?How is the cost hierarchy helpful to Teledor in managing it’s business?

Activity based costing is a method of costing that identifies all the activities happening and being…

Answered: Classify each of the proceeding cost as…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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5-17 Coast Hierarchy;

Teledor Inc. manufactures boomboxes (music system with radio, MP3, and compact disc player) for a different well known companies. The boomboxes differ significantly in their complexity and the batch sizes in which they are manufactured. The following cost were in incurred in 2018.

Indirect Manufacturing Labour Cost such as supervision that supports direct manufacturing labour, $1,500,000.
Procurement Cost of placing purchased orders, receiving materials, and paying suppliers that are related to the number of purchased orders placed, $800,000.
Cost of indirect Materials $450,000.
Cost incurred to set up machines each time a different product needs to be manufactured, $900,000.
Designing processes, drawing process charts, making engineering process for products $900,000.
Machine related overhead cost such as depreciation, maintenance, production, engineering, $1,200,000. these resources are related to the activity of running the machines.
Plant management, plant rental, and insurance $950,000.

Required:

Classify each of the proceeding cost as output unit, batch level, product sustaining, or facility-sustaining. Explain your answers.
Consider two (2) boomboxes made by Teledor Inc. \one boombox is complex to make and is made in many small batches. The other boombox is simple to make and is made to a few large batches. Supposed that Teledor needs the same number of machine hours to make either boombox. If Teledor allocated all overhead cost using machine hours as the only allocation base, how, if all, would the boomboxes be miscosted? Briefly Explain why?
How is the cost hierarchy helpful to Teledor in managing it’s business?

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