Costs and Cost Allocation
Costs and Cost Allocation
Lavish Lamps produces high-quality lightin" rel="nofollow">ing fixtures in" rel="nofollow">in its manufacturin" rel="nofollow">ing plant. The fixtures are designed and manufactured accordin" rel="nofollow">ing to the customer’s specifications and are therefore made-to-order. The plant manager has provided you with the followin" rel="nofollow">ing list of key activities within" rel="nofollow">in the plant:
Product design
Production schedulin" rel="nofollow">ing
Purchasin" rel="nofollow">ing department
Receivin" rel="nofollow">ing department
Machin" rel="nofollow">ine set-up
Quality control
Plant security
Customer credit check
Machin" rel="nofollow">ine operation
Main" rel="nofollow">intenance
Required:
For each of these activities:
Identify a cost object and a cost driver.
How would you recommend recordin" rel="nofollow">ing each of these costs?
How should these costs be allocated to lightin" rel="nofollow">ing fixtures?