costacctg13_sm_ch05

In addit ion the co mplex boom box will use more

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: achine­related overhead costs (depreciation and maintenance) of $1,200,000 are output unit­level costs because they change with the number of units produced. g. Plant management, plant rent, and insurance costs of $950,000 are facilit y­sustaining costs because the costs of these act ivit ies cannot be traced to individual products or services but support the organizat ion as a who le. 5­3 2. The co mplex boom box made in many batches will use significantly more batch­level overhead resources compared to the simple boom box that is made in a few batches. In addit ion, the co mplex boom box will use more product­sustaining overhead resources because it is complex. Because each boom box requires the same amount of machine­hours, both the simple and the co mplex boom box will be allocated the same amount of overhead costs per boom box if Teledor uses only machine­hours to allocate overhead costs to boom boxes. As a result, the complex boom box will be undercosted (it consumes a relat ively high level of resources but is reported to have a relat ively low cost) and...
View Full Document

Ask a homework question - tutors are online