Question

Excercise 7-8 Activity Measures --- Various activities at Husang Corporation a manufacturing company need to be categorized

1. Classify each activity as a unit level, batch level, product level, customer level, or organization sustaining. For each activity provide one example.

2. For each activity, provide an example of one transaction driver and one duration driver that might be used in Husang Corporation's ABC system

Activity	1. ABC Level	example	2. Driver
Direct Labour workers assemble a product
Products are designed by engineers
Equipment is set up to process a batch
Machines are used to shape and cut materials
Monthly bills are sent out to regular customers
Materials are moved from the receiving dock to production lines
Al completed units are inspected for defects
Diversity Training is provided to all employees in the company

Answer 1

Activity

1) Direct Labour workers assemble a product - unit level . Example -time spent on assembling the product

  

2)Products are designed by engineers - Product-level

Example-Number of new products designed; time spent developing new product

3)Equipment is set up to process a batch - Batch-level example -Number of batches run; time spent setting up

4)Machines are used to shape and cut materials-unit level- example -no.of unit cut; time spent on cutting the material.

5)Monthly bills are sent out to regular customers -

Customer- level

,example- Number of customer bills prepared; time spent for prepared bill.

6)Materials are moved from the receiving dock to production lines- Batch-level

Example- Number of materials moves; time spent moving materials

7)All completed units are inspected for defects - unit level example- no.of units inspecred; time taken to inspect units

8)Diversity Training is provided to all employees in the company- Organization Level

Example-Number of Employees taking diversity training;

Time spent in training

In all cases except for direct labour two activity measures are listed. The first is a “transaction driver” and the second is a “duration driver.” Transaction drivers are simple counts of the number of times an activity occurs such as the number of times materials are moved. Duration drivers are measures of the amount of time required to perform an activity such as the time spent moving materials. In general, duration drivers provide for more accurate measures of the consumption of resources than transaction drivers, but they take more effort to record.