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: Activity drivers for each activity have been identified and their practical capacities listed:
The costs of facility-level activities are assigned using machine hours.
What is(are) the facility-level activity(ies)?

Question

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: Activity drivers for each activity have been identified and their practical capacities listed:
 The costs of facility-level activities are assigned using machine hours.
What is(are) the facility-level activity(ies)?

Quizplus · Accepted Answer

Facility-level activities are those that affect the entire manufacturing process and cannot be traced to individual products. In this case, providing utilities (plantwide) and providing space are the only activities that fit this description. Inspecting is not a facility-level activity, as it is part of the manufacturing process and directly affects the quality of the individual products. Therefore, the best choice is D, as both providing utilities and providing space are facility-level activities.

Owens Ltd Produces Specially Machined Parts