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.

---

Definitions:

Adjustment Refusal

A response denying a request for modification, compensation, or correction in a business setting.

Common Agreement

A common agreement refers to a mutual understanding or consensus reached by two or more parties.

Free Use

The allowance to use content, material, or facilities without restrictions or payment, often within certain legal or ethical limits.

Equipment

The necessary items for a particular purpose, including tools, machinery, and other physical devices.