The Blizzard Company manufactures skiing equipment. They make six different types of skis and this requires reconfiguring the machinery to new settings for the production of each of the six models. Under activity-based costing, which of the following would be the most appropriate basis on which to apportion the set-up costs for each model?

Question

Quizplus · Accepted Answer

Apportioning set-up costs based on the number of set-ups is the most appropriate in this situation as it reflects the actual resource consumed in reconfiguring the machinery for each model of skis. Direct labour and machine hours may not accurately capture the set-up process, while number of orders may not be specific enough to account for the individual set-up costs for each model.

The Blizzard Company Manufactures Skiing Equipment