Selecting an Activity Base
Listed Below Are Six Activity Cost

question 95

Essay

Selecting an activity base
Listed below are six activity cost pools used by the Keaton Corporation:
$$\begin{array} { | l | l | l | } \hline \text { Heating costs } & \text { Machinery power costs } \\\hline \text { Machinery set-up costs } & \text { Equipment maintenance costs } \\\hline \text { Materials storage costs } & \text { Purchasing department costs } \\\hline\end{array}$$
Listed below are six activity bases used by Keaton to allocate manufacturing overhead costs to products. In the space provided next to each activity base, indicate for which of the above cost pools it is a cost driver.
_______ (a) Number of equipment work orders related to each product line.
_______ (b) Number of direct material purchase orders related to each product line.
_______ (c) Number of production runs related to each product line.
_______ (d) Square feet of direct materials warehouse space occupied by each product line.
_______ (e) Number of machine hours required to produce each product line.
_______ (f) Square feet of production space occupied by each product line.

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Definitions:

Oral Stage

The first stage in Freud's psychosexual development, extending from birth to about 18 months, where an infant's pleasure centers on the mouth.

Eats Too Much

The behavior of consuming food in quantities greater than what is required or considered healthy for an individual’s needs.

Fixated

An obsessive interest or attachment to someone or something.

Anal Stage

The second stage in Freud's psychosexual development theory, where pleasure centers on bowel and bladder elimination, and coping with demands for control.