Question

Adamson Company manufactures four lines of garden tools. As a result of an activity analysis, the accounting department has identified eight activity cost pools. Each of the product lines is produced in large batches, with the whole plant devoted to one product at a time. Classify each of the following activities or costs as either unit-level, batch-level, product-level, or facility-level. Activities (a) Machining parts. (b) Product design. (c) Plant maintenance. (d) Machine setup. (e) Assembling parts. (f) Purchasing raw materials. (g) Property taxes. (h) Painting.

Answer 1

Answer:

(a) unit level activity

(b) Product level activity

(c)Facility level activity

(d) Batch level activity

(e) unit level activity

(f) batch level activity

(g) facility level activity

(h) unit level activity

Explanation:

Unit level activity : It is that type of activity which is deals with only unit of product whether it is a selling unit, variable cost unit , direct material unit, direct labor unit or fixed cost unit.

Batch level activity: It is that type of activity which focuses on batches or bulk goods so that good discount to be provided due to which customers  are happy that results in increase in sales.

Product level activity: It is that type of activity which deals in a single product or we can say finished product which is ready to sale.

Facility level activity: It is that type of activity which aims in giving the facilities relating to the product or charges some taxes.

BY going through the meaning of each one of the activity level, we get to know that (a) unit level activity

(b) Product level activity

(c)Facility level activity

(d) Batch level activity

(e) unit level activity

(f) batch level activity

(g) facility level activity

(h) unit level activity