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
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
An excel sheet with all the steps for the calculation is presented. Here the costs to the materials-related, machinery related, set up, inspection, engineering and facility-sustaining activities are each found individually. Also, the activity driver is explained.