Problem: HI-resolution Ltd manufactures Blu-ray players un its perth plant. The following costs are budgeted for January.
Raw material and components $2950000
Insurance, plant $600000
Electricity, machinery $120000
Electricity, light $60000
Engineering design $610000
Depreciation, plant $700000
Depreciation, machinery $1400000
Security wages, plant $40000
Equipment manitance, wages $150000
Equipment maintance, parts $30000
Setup wages $40000
Inspection of finished goods $30000
Property taxes $120000
Natural gas, heating $30000
Required:
1) Assign the costs to the materials-related, machinery related, set up, inspection, engineering and facility-sustaining activities and calculate the total cost of each activity.
2) Identify an activity driver suitable for assingning each activity's costs to products.