Question

Question) Describe 5 activity drivers associated with a tomato paste company e.g. Kraft Heinz. Justify your answer.

Answer 1

5 activity drivers associated with a tomato paste company

· Batch setup hours - Production is done in batches in a food processing manufacturing unit   and hence batch setup hours are used for allocation of overheads for costs relating to batches.

· Machine maintenance cost – Maintenance of machine cost would get allocated based on machine hours used by each product. Periodical machine maintenance is of utmost importance to keep the machines in good working condition. These costs are driven by machine hours

· Number of Purchase order – The Material and stores purchase related costs are allocated based on Purchase orders issued to supplier for purchase of material.

· Quality inspection hours- The Finished goods produced goes through rigorous quality checking process and hence the quality related costs are allocated based on quality inspection hours spent on each product

· Pounds of Material handled: The incoming material handling costs would be allocated based on pounds of material handled. The inward material should be shifted from the receiving dock to the material stores room hence this cost would gets allocated based on pounds of material handled