Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional departmental assembly line system to a manufacturing cell in order to produce the cabinets. Suppose that the cabinet manufacturing cell is the cost object. Assume that all or a portion of the following costs must be assigned to the cell:
- a.
Depreciation on electric saws, sanders, and drills used to produce the cabinets - b. Power to heat and cool the plant in which the cell is located
- c. Salary of cell supervisor
- d. Wood used to produce the cabinet housings
- e. Maintenance for the cell’s equipment (provided by the maintenance department)
- f. Labor used to cut the wood and to assemble the cabinets
- g. Replacement sanding belts
- h. Cost of janitorial services for the plant
- i. Ordering costs for materials used in production
- j. The salary of the industrial engineer (she spends about 20 percent of her time on work for the cell)
- k. Cost of maintaining plant and grounds
- l. Cost of plant’s personnel office
- m. Depreciation on the plant
- n. Plant receptionist’s salary and benefits
Required:
Identify which cost assignment method would likely be used to assign the costs of each of the preceding activities to the cabinet manufacturing cell: direct tracing, driver tracing, or allocation. When driver tracing is selected, identify a potential activity driver that could be used for the tracing.
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