Attraction Corporation Produces Specially Machined Parts The Costs of Facility-Level Activities Are Assigned Using Machine Hours

question 175

Multiple Choice

Attraction Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications) . Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space. Costs have been assigned to each activity using direct tracing and resource drivers: $$\begin{array}{l}\begin{array} { l r } \text { Engineering } & \$ 1,000,000 \\\text { Setups } & 900,000 \\\text { Machining } & 2,000,000 \\\text { Inspection } & 800,000 \\\text { Providing space } & 250,000 \\\text { Providing utilities } & 180,000\end{array}\\\text { Activity drivers for each activity have been identified and their practical capacities listed: }\\\begin{array} { l r } \text { Machine hours } & 25,000 \\\text { Setups } & 200 \\\text { Engineering hours } & 5,000 \\\text { Inspection hours } & 2,500\end{array}\end{array}$$ The costs of facility-level activities are assigned using machine hours.
What is (are) the product-level activity(ies) ?

• A)engineering
• B)setups
• C)inspecting
• D)all of the above

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Definitions:

Balance-Of-Trade Deficit

A situation where a country's imports exceed its exports, leading to a negative balance in trade.

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Import Quotas

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Taxes imposed by a government on imported goods, often to protect domestic industries from foreign competition.