Roberta, Inc., manufactures elliptical machines for several well-known companies. The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were incurred in 2017: a. Indirect manufacturing labor costs such as supervision that supports direct manufacturing labor, $935,000 b. Procurement costs of placing purchase orders, receiving materials, and paying suppliers related to the number of purchase orders placed, $650,000 c. Cost of indirect materials, $234,000 d. Costs incurred to set up machines each time a different product needs to be manufactured, $392,000 e. Designing processes, drawing process charts, and making engineering process changes for products, $236,900 f. Machine-related overhead costs such as depreciation, maintenance, and production engineering, $865,000 (These resources relate to the activity of running the machines.) g. Plant management, plant rent, and plant insurance, $498,000 Q1. How is the cost hierarchy helpful to Roberta in managing its business?
Roberta, Inc., manufactures elliptical machines for several well-known companies. The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were incurred in 2017:
a. Indirect
b. Procurement costs of placing purchase orders, receiving materials, and paying suppliers related to the number of purchase orders placed, $650,000
c. Cost of indirect materials, $234,000
d. Costs incurred to set up machines each time a different product needs to be manufactured, $392,000
e. Designing processes, drawing process charts, and making engineering process changes for products, $236,900
f. Machine-related
g. Plant management, plant rent, and plant insurance, $498,000
Q1. How is the cost hierarchy helpful to Roberta in managing its business?
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