Figure 11-2
Owens Ltd. produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space. Costs have been assigned to each activity using direct tracing and resource drivers: $\begin{array}{ll}
\text { Engineering } & £ 1,000,000 \
\text { Setups } & 900,000 \
\text { Machining } & 2,000,000 \
\text { Inspection } & 800,000 \
\text { Providing space } & 250,000 \
\text { Providing utilities } & 180,000
\end{array}$ Activity drivers for each activity have been identified and their practical capacities listed: $\begin{array}{ll}
\text { Machine hours } & 25,000 \
\text { Setups } & 200 \
\text { Engineering hours } & 5,000 \
\text { Inspection hours } & 2,500
\end{array}$ The costs of facility-level activities are assigned using machine hours.
-Refer to Figure 11-2. What is(are) the batch-level activity(ies)?

Question

Quizplus · Accepted Answer

Batch-level activities are those that are performed each time a batch is handled or processed, regardless of the size of the batch. In the scenario described, setups are performed for each batch, engineering is required for designing the parts based on customer specifications for each batch, and inspecting is done for each batch to ensure quality. Therefore, all these activities are considered batch-level.

Figure 11-2 Owens Ltd Activity Drivers for Each Activity Have Been Identified and Their

Figure 11-2
Owens Ltd Activity Drivers for Each Activity Have Been Identified and Their