Décor Carpets Incurs a Variety of Costs in Producing Several

question 40

Essay

Décor Carpets incurs a variety of costs in producing several grades of carpet for the residential and commercial housing industries.The different grades and styles are manufactured in batches or production runs.The company uses activity-based costing to assign overhead costs to its different product lines.Selected costs are provided in the following table: $$\begin{array} { | l | l | l | l | } \hline & \text { Cost Description } & \begin{array} { l } \text { Cost Hierarchy } \\( \mathbf { U } , \mathbf { B } , \mathbf { P } , \text { or F } )\end{array} & \text { Cost Driver } \\\hline \text { a } & \text { Set up costs for each production run } & & \\\hline \text { b } & \text { Inventory storage costs } & & \\\hline \text { c } & \text { Batch inspection costs } & & \\\hline \text { d } & \text { Indirect materials } & & \\\hline \text { e } & \text { Factory insurance costs } & & \\\hline \text { f } & \text { Material handling costs } & & \\\hline \text { g } & \text { Legal costs of protecting various patents } & & \\\hline \text { h } & \text { Utilities cost incurred to operate machinery } & & \\\hline \text { i } & \text { Depreciation of factory building } & & \\\hline\end{array}$$ Required:
Complete the table provided.In the Cost Hierarchy column,insert a (U)if the cost described is a unit-level cost,a (B)if a batch-level cost,a (P)if a product-level cost,or (F)if a facility-level cost.In the Cost Driver column enter a cost driver (for example,direct labor hours)that you believe might be appropriate for allocating that particular cost to units of products.

---

Definitions:

MB < MC

This indicates a scenario where the marginal benefit of producing or consuming one more unit of a good is less than the marginal cost of producing that additional unit.

Decision Maker

An individual or entity responsible for making choices that will impact outcomes in a business or personal context.

Marginal Benefit

The additional satisfaction or utility gained from receiving one more unit of a good or service.

Society's Well-Being

The overall level of happiness, health, and economic prosperity experienced by a community or society.