Figure 11-2
Owens Ltd Activity Drivers for Each Activity Have Been Identified and Their

question 32

Multiple Choice

Figure 11-2
Owens Ltd. 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: $\begin{array}{ll}\text { Engineering } & £ 1,000,000 \\\text { Setups } & 900,000 \\\text { Machining } & 2,000,000 \\\text { Inspection } & 800,000 \\\text { Providing space } & 250,000 \\\text { Providing utilities } & 180,000\end{array}$ Activity drivers for each activity have been identified and their practical capacities listed: $\begin{array}{ll}\text { Machine hours } & 25,000 \\\text { Setups } & 200 \\\text { Engineering hours } & 5,000 \\\text { Inspection hours } & 2,500\end{array}$ The costs of facility-level activities are assigned using machine hours.
-Refer to Figure 11-2. What is the cost pool rate for the facility-level activities?

• A)£80.00 per machine hour
• B)£13,500.00 per setup
• C)£17.20 per machine hour
• D)£97.20 per machine hour

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Definitions:

Diameter

A straight line passing from side to side through the center of a body or figure, especially a circle or sphere, and terminating at the circumference or surface.

Macules

Flat, distinct, discolored areas of skin that do not involve any change in the texture or thickness of the skin.

Dilation

The process of expanding or enlarging an opening or structure in the body.

Irregular

Deviating from what is usual, normal, or expected; often refers to inconsistent or unpredictable patterns or behaviors.