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EXERCISE: ABC Cost Hierarchy
The following activities occur at Greenwich Corporation, a company that manufactures a variety of products.
a. Various individuals manage the parts inventories.b. A clerk in the factory issues purchase orders for a job.c. The personnel department trains new production workers.d. The factory's general manager meets with other department heads such as marketing to coor- dinate plans.e. Direct labor workers assemble products.f. Engineers design new products.g. The materials storekeeper issues raw materials to be used in jobs.h. The maintenance department performs periodic preventive maintenance on general-use equipment.
Required:
Classify each of the activities above as either a unit-level, batch-level, product-level, or organization- sustaining activity.
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Smithy Company produces hockey helmets. The standard cost for each helmet is as follows: Direct material 5.0 lbs at $4.00/lb. $20.00 Direct labor 2.0 hrs @ $16.00/hr. $32.00 Overhead $10.00. During November, 2,000 helmets were produced. 10,600 lbs. o..
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Analysis of the receivables indicates doubtful accounts of $20,000 - in March of the following fiscal year, the $550 owed by Flake Co. on account is written off as uncollectible.
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