Sleepo Ltd Has Been Manufacturing Only One Type of Alarm

question 95

Multiple Choice

Sleepo Ltd has been manufacturing only one type of alarm clock, the PlainSnooze model. The company is considering developing some modifications to make another, more advanced model. Two options are available: the ToughSnooze and the MusicSnooze. Both ToughSnooze and MusicSnooze will start with the same processes as the PlainSnooze model, but with additional advanced functions. ToughSnooze has a voice activated snooze function, as well as an 'indestructible' aluminium casing, created for people who throw their alarm clocks around. The MusicSnooze also has a voice activated snooze function, but instead of the tough aluminium casing, it has a 'music choice' function.
In choosing between making the ToughSnooze or the MusicSnooze, which of the following costs are relevant?
I The cost of building the PlainSnooze model.
Ii) The cost of building a voice activated snooze function.
Iii The cost of building an 'indestructible' aluminium cover.
Iv The cost of building the 'music choice' function.

• A) i, ii, iii and iii
• B) ii and iii
• C) ii, iii and iv
• D) iii and iv

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Definitions:

Work in Process

Refers to the costs incurred for partially completed goods in manufacturing at a certain point in time.

Manufacturing Cost Elements

The primary components of manufacturing costs, typically including direct materials, direct labor, and manufacturing overhead.

Physical Unit Flow

A method of measuring and tracking the movement of physical units through a production process or system.

Unit Production Costs

The total cost associated with producing one unit of a product, including both direct costs like materials and labor, as well as allocated overhead.