Question

9 LM Corporation produces flat-screen computer monitors. Consider the following selected costs that arose during the current year: 1—Direct materials used: $2,820,000 2—Factory rent, utilities, and taxes: $850,000 3—New technology design engineering: $1,570,000 4—Materials receiving: $215,000 5—Manufacturing-run/set-up charges: $80,000 6—Equipment depreciation: $75,000 7—General factory management salaries: $1,350,000 Required: Determine the cost of the firm's unit-level, batch-level, product-sustaining, and facilitylevel activities. Answer here: Unit-level= Batch-level= Product-sustaining = Facility-level =

Answer 1

			Remarks
1	Direct materials used	$2,820,000	Unit-level
2	Factory rent, utilities, and taxes	$850,000	Facility-level
3	New technology design engineering	$1,570,000	Product-sustaining
4	Materials receiving	$215,000	Batch-level
5	Manufacturing-run/set-up charges	$80,000	Batch-level
6	Equipment depreciation	$75,000	Facility-level
7	General factory management salaries	$1,350,000	Facility-level
	Unit Level activities are such activities used frequently whenever a product is made of service provided e.g. Direct material, Direct labor etc.
	Batch Level activities are such activities used frequently whenever a group of units is made e.g. Machine setups, purchase orders etc.
	Product Sustaining or product line activities are those activities that supports a entire product line, engineering services for improvements of product, product design changes etc. it can not be attributed to a single unit.
	Facility level are necessary acttivities for providing infrastructure to manufacture e.g. Depreciation, plant security etc. it is administrative nature activities.