Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional departmental assembly line system to a manufacturing cell in order to produce the cabinets. Sup-pose that the cabinet manufacturing cell is the cost object. Assume that all or a portion of the following costs must be assigned to the cell:a. Depreciation on electric saws, sanders, and drills used to produce the cabinetsb. Power to heat and cool the plant in which the cell is locatedc. Salary of cell supervisord. Wood used to produce the cabinet housingse. Maintenance for the cell’s equipment (provided by the maintenance department)f. Labor used to cut the wood and to assemble the cabinetsg. Replacement sanding beltsh. Cost of janitorial services for the planti. Ordering costs for materials used in productionj. The salary of the industrial engineer (she spends about 20 percent of her time on work forthe cell)k. Cost of maintaining plant and grounds l. Cost of plant’s personnel officem. Depreciation on the plantn. Plant receptionist’s salary and benefitsRequired:Identify which cost assignment method would likely be used to assign the costs of each of thepreceding activities to the cabinet manufacturing cell: direct tracing, driver tracing, or allocation.When driver tracing is selected, identify a potential activity driver that could be used for thetracing.
Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional
departmental assembly line system to a manufacturing cell in order to produce the cabinets. Sup-
pose that the cabinet manufacturing cell is the cost object. Assume that all or a portion of the
following costs must be assigned to the cell:
a.
b. Power to heat and cool the plant in which the cell is located
c. Salary of cell supervisor
d. Wood used to produce the cabinet housings
e. Maintenance for the cell’s equipment (provided by the maintenance department)
f. Labor used to cut the wood and to assemble the cabinets
g. Replacement sanding belts
h. Cost of janitorial services for the plant
i. Ordering costs for materials used in production
j. The salary of the industrial engineer (she spends about 20 percent of her time on work for
the cell)
k. Cost of maintaining plant and grounds
l. Cost of plant’s personnel office
m. Depreciation on the plant
n. Plant receptionist’s salary and benefits
Required:
Identify which cost assignment method would likely be used to assign the costs of each of the
preceding activities to the cabinet manufacturing cell: direct tracing, driver tracing, or allocation.
When driver tracing is selected, identify a potential activity driver that could be used for the
tracing.
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