Inventive Manufacturing Company Has the Following Activities: Creating Bills of Materials

question 30

Essay

Inventive Manufacturing Company has the following activities: creating bills of materials (BOM), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger accounts reveal the following expenditures for manufacturing engineering:
The equipment is used for two activities: improving processes and designing tooling. Forty percent of the equipment's time is used for improving processes and 60 percent is used for designing tools. The salaries are for five engineers, one who earns $160,000 and four who earn $85,000 each. The $160,000 engineer spends 30 percent of his time training employees in new processes and 70 percent of his time on improving processes. One engineer spends 100 percent of her time on designing tooling and another engineer spends 100 percent of his time on improving processes. The remaining two engineers spend equal time on all activities. Supplies are consumed in the following proportions:
Using the resource drivers and direct tracing, calculate the cost of each manufacturing engineering activity. What are the resource drivers?

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Definitions:

Proprietorship

A form of business organization where a single individual owns the company and is responsible for its debts.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholder equity at a specific point in time, providing a snapshot of its financial condition.

Assets Section

Part of a balance sheet that lists and describes an entity's resources or items of value owned.

Merchandising Business

An enterprise that purchases finished goods for resale to generate profit, operating between the producers and end consumers.