29 Jun Question Mill Creek Company, loc
Question
Mill Creek Company, located in Lakeside, Oregon, manufactures travel trailers and toy haulers. Mill Creek’s management team has just completed the budget for the upcoming year and has estimated the following costs:
Name of Budgeted Cost Budgeted Cost
Plant insurance $ 86,100
Testing raw materials 45,000
Manufacturing equipment setup 7,200
Quality inspections 57,000
Property taxes 23,000
Electricity, plant 14,000
Electricity, manufacturing equipment 51,250
Depreciation, plant 18,800
Depreciation, manufacturing equipment 36,700
Maintenance worker (manufacturing equipment) 22,500
Indirect labor (manufacturing equipment setup) 8,300
Design engineering 220,000
Required:
1. Assign each of the budgeted costs above to one of the following activity cost pools:
• Engineering
• Equipment setup
• Quality control
• Factory facilities
• Manufacturing equipment
2. Compute the total cost of each pool.
3. Indicate whether the activities in each pool are unit, batch, product, or facility level.
4. Identify the most likely driver for each cost pool from the following list:
• Number of inspections/tests
• Square feet
• Machine hours
• Engineering hours
• Number of setups
Use the following table to organize your answer. The engineering cost pool is done as an example. Other pools may have more than one cost item included.
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