In addit ion the co mplex boom box will use more

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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...
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