Problem: Andrea Boss, Inc. manufactures five models of kitchen appliances at its Vista plant.
The company is installing activity-based costing and has identified the following activities performed at its Vista plant.
1. Designing new models.
2. Purchasing raw materials and parts.
3. Receiving and inspecting raw materials and parts.
4. Storing and managing inventory.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Maintaining and repairing machinery and equipment.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Training all employees of the company.
12. Painting and packaging finished appliances.
Having analyzed its Vista plant operations for purposes of installing activity-based costing, Andrea Boss, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead costs to its products.
Instructions:
Using the activities listed above, identify for each activity one or more cost drivers that might be used to assign overhead to Andrea Boss's five products.