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# Cost Drivers For Product Costing Decisions

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I need help to analyze "how cost drivers can be used by managers when reviewing product costing decisions".

#### Solution Preview

Step 1
Cost drivers can be used by managers when reviewing product costing decisions. The cost drivers allow the managers to identify those activities that are affecting several other costs. For example, an activity is running a lathe machine for thirty minutes is an activity. The cost driver is lathe machine operating hours; this drives the cost of labor, maintenance, and power consumption of running the lathe machining activity (a). When reviewing product costing decisions the cost driver namely the operating hours of the lathe machine allows the manager to calculate the actual cost of making a product and pricing it appropriately. When the manager reviews the cost driver, he includes in the cost of labor, cost of maintenance, and power consumption of running the lathe machine. This gives the manager a more realistic cost. Further, ...

#### Solution Summary

This solution explains product costing decisions. The sources used are also included in the solution.

\$2.19

## Cost drivers

Please review. Do I have all of the cost drivers on E4-7 or am I missing some? Also, please review my computations for E4-8.

(See attached file for full problem description)

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Andrea Boss, Inc. manufactures five models of kitchen appliances at its Vista plant. The company is installing activity-based costing and has identified the following activities performed at its Vista Plant.
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(See attached file for full problem description)

Andrea Boss, Inc. manufactures five models of kitchen appliances at its Vista plant. The company is installing activity-based costing and has identified the following activities performed at its Vista Plant.

Having analyzed its Vista plant operations for purposes of installing activity-based costing, Andrea Boss, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead costs to its products.

Instructions

Using the activities listed below, identify for each activity one or more cost drivers that might be used to assign overhead to Andrea Boss's five products.

1. Designing new models.
2. Purchasing raw materials and parts.
3. Receiving and inspecting raw materials and parts.
4. Sorting and managing inventory.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Maintaining and repairing machinery and equipment.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Training all employees of the company.
12. Painting and packaging finished appliances.

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