Décor Carpets Incurs a Variety of Costs in Producing Several

question 77

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:
Required:
For each item identify the cost hierarchy and the cost driver.Use 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 an (F)if a facility-level cost.Name a cost driver (for example,direct labor hours)that you believe might be appropriate for allocating that particular cost to units of products.

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Definitions:

Cash Balance

The amount of cash a company has available at any point in time, as reflected in its financial statements.

Timing Differences

Discrepancies between the timing of cash flows and the recognition of revenues and expenses in accounting records.

Recording Error

Mistakes made during the accounting process of recording financial transactions.

Journal

The initial record in which the effects of a transaction are recorded.