Consider the following costs that relate to a bank and a manufacturer of software:
Bank
1.Review cost of commercial loan applications
2.Operating cost of human resources department
3.Immediate processing cost of a specific customer's cash deposit
4.Bank membership cost of joining local Chamber of Commerce
Software manufacturer
5.Label and packaging charges from a commercial printer for a new software release
6.Air conditioning/heating costs of the firm's production plant
7.Transport cost of moving the CD-output from production run no.1 to the company's warehouse
8.Design,development,and coding cost of new spreadsheet software
Required:
A.

A.Classify the eight costs listed as arising from either a unit-level,batch-level,product-sustaining,or facility-level activity.
B.The number of loan applications would be more appropriate because it has a higher correlation with the amount of review cost incurred.Applications create review cost;customers,on the other hand,may not.
B.Would number of loan applications or number of customers be a more appropriate cost-driver base for the review of loan applications? Briefly explain.

Question

Consider the following costs that relate to a bank and a manufacturer of software:
Bank
1.Review cost of commercial loan applications
2.Operating cost of human resources department
3.Immediate processing cost of a specific customer's cash deposit
4.Bank membership cost of joining local Chamber of Commerce
Software manufacturer
5.Label and packaging charges from a commercial printer for a new software release
6.Air conditioning/heating costs of the firm's production plant
7.Transport cost of moving the CD-output from production run no.1 to the company's warehouse
8.Design,development,and coding cost of new spreadsheet software
Required:
A.
  
A.Classify the eight costs listed as arising from either a unit-level,batch-level,product-sustaining,or facility-level activity.
B.The number of loan applications would be more appropriate because it has a higher correlation with the amount of review cost incurred.Applications create review cost;customers,on the other hand,may not.
B.Would number of loan applications or number of customers be a more appropriate cost-driver base for the review of loan applications? Briefly explain.

Quizplus · Accepted Answer

The Answer of Consider the following costs that relate to a bank and a manufacturer of software:
Bank
1.Review cost of commercial loan applications
2.Operating cost of human resources department
3.Immediate processing cost of a specific customer's cash deposit
4.Bank membership cost of joining local Chamber of Commerce
Software manufacturer
5.Label and packaging charges from a commercial printer for a new software release
6.Air conditioning/heating costs of the firm's production plant
7.Transport cost of moving the CD-output from production run no.1 to the company's warehouse
8.Design,development,and coding cost of new spreadsheet software
Required:
A.
  
A.Classify the eight costs listed as arising from either a unit-level,batch-level,product-sustaining,or facility-level activity.
B.The number of loan applications would be more appropriate because it has a higher correlation with the amount of review cost incurred.Applications create review cost;customers,on the other hand,may not.
B.Would number of loan applications or number of customers be a more appropriate cost-driver base for the review of loan applications? Briefly explain.

Consider the Following Costs That Relate to a Bank and a Manufacturer