Question

Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro...

Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities.

During the past year, it has incurred:

Cost

Description

$725,000

Product development costs

$475,000

Materials handling costs

$1,250,000

Production line labor costs

$450,000

Production setup costs

$250,000

Power costs (for cooling beer and running equipment)

$875,000

Manufacturing facility management costs



Using the manufacturing cost hierarchy, what is the total cost that would be classified as facility-level activity costs?

Homework Answers

Answer #1
Ans. $875,000
Explanations: Manufacturing facility management cost is an only example
of facility level activity costs.
The other costs will be classified by the following way :
Description Activity level
Product development costs Product level activity
Materials handling costs Unit level activity
Production line labor costs Unit level activity
Production setup costs Batch level activity
Power costs (for cooling beer and running equipment) Unit level activity
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