Question

ABC Worksheet

For each of the situations below, indicate whether the activity is a(n) unit-level activity, batch-level activity, product sustaining activity or facility-level activity. If you feel necessary, add a BRIEF explanation as to your rationale.

1. Maintenance of parts inventory for Malibu Barbie in a Mattel toy factory

2. Cost of an adjunct professor’s salary for a night class

3. The review of each tax return by a supervisor at H&R Block

4. Cost of oil filters at Jiffy Lube

5. Cost of safety training and equipment at a foundry producing specialty products

6. Costs associated with a special machine which sands the edges of each finished unit produced, including lampstands, outlet covers and switchplates

Classify each of the following costs as value-added or non-value added. Add a BRIEF explanation of your rationale, if you feel it necessary.

1.        Cooking meals in a restaurant

2.        Filing 941 and W-2 data with the Federal government

3.        Storage of recreational vehicles in a parking lot prior to sale.

4.        Rewriting faulty software code in a computer software company

Managerial Accounting

Answer 1

For each of the situations below, indicate whether the activity is a(n) unit-level activity, batch-level activity, product sustaining activity or facility-level activity.
Answer
Particulars	Type of Costing	Remarks
Maintenance of parts inventory for Malibu Barbie in a Mattel toy factory	product sustaining activity	As this activity involves support to entire product line like warehousing and Storage
Cost of an adjunct professor’s salary for a night class	batch-level activity	As the cost of professor salary is related to Specific batch of students in the night class
The review of each tax return by a supervisor at H&R Block	facility-level activity	As this in the form of administrative in nature like accouting services. It is like support service to the orgnaisation as a whole
Cost of oil filters at Jiffy Lube	product sustaining activity	This is like support activity in the form of engineering changes made in the assembly line
Cost of safety training and equipment at a foundry producing specialty products	unit-level activity	It is related to specific product like direct labor
Costs associated with a special machine which sands the edges of each finished unit produced, including lampstands, outlet covers and switchplates	unit-level activity	It is related to specific product like direct cost associated with the product produced

Classify each of the following costs as value-added or non-value added. Add a BRIEF explanation of your rationale, if you feel it necessary.
Answer
Particulars	Type of Cost	Remarks
Cooking meals in a restaurant	value-added	A value-added activity is any activity taken that increases the benefit of a good or service to a customer like value addition in the good produced or service provided. Since Cooking meals is a value added activity as it has diect impact on the costing of meal make and sales of the meal
Filing 941 and W-2 data with the Federal government	Non Value Added	It does not have any impact on product produced as value addition. Or say it does not add value to the product
Storage of recreational vehicles in a parking lot prior to sale.	Non Value Added	It does not have any impact on product produced as value addition. Or say it does not add value to the product
Rewriting faulty software code in a computer software company	Non Value Added	It is just like repair of the product which has no value addition and will not bring any extra revenue for the company.