Question

Attraction Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space. Costs have been assigned to each activity using direct tracing and resource drivers:Engineering $1,000,000Setups 900,000Machining 2,000,000Inspection 800,000Providing space 250,000Providing utilities 180,000Activity drivers for each activity have been identified and their practical capacities listed:Machine hours 25,000Setups 200Engineering hours 5,000Inspection hours 2,500The costs of facility-level activities are assigned using machine hours.What is (are) the unit-level activity(ies)?a. setups.b. providing space.c. machining.d. engineering.

Answer 1

Answer:

c. machining.

Explanation:

Unit level activities take place in order to manufacture the product. This manufacturing process has four activities:

• engineering
• setups
• machining
• inspecting

Unit level activities depend  on the amount of units produced, this means that as more units are produced, more costs will be allocated. In this case, engineering, setups and inspecting are done on a batch basis, which means that they are batch level activities.

Only machining costs are proportional to the number of units produced.