United Express (UnEx) is a package delivery company, which offers two types of s

Question

United Express (UnEx) is a package delivery company, which offers two types of service: Air Delivery (Overnight) and Ground Shipping (standard). They have formed an activity based costing (ABC) committee to examine how to better apply overhead costs. Identify whether the costs associated with the activity is better identified as a unit, batch, customer, product, or organization-sustaining level costs. (You will use each answer once).
1. UnEx Air Delivery uses a special shipping container that is different than the Ground Shipping boxes. Unit-level

2. Each customer contract is reviewed on an annual basis and information is verified and updated, if needed. Batch-level

3. Each package is examined and a label with a bar code is printed and applied. Customer-level

4. A truck is loaded with 400-500 packages and sent out for delivery. Product-level

5. The company's headquarters does not handle any packages. Only the executive offices, HR and accounting are housed there. Organization-sustaining

Explanation / Answer

1. UnEx Air Delivery uses a special shipping container that is different than the Ground Shipping boxes. = Product-level 2. Each customer contract is reviewed on an annual basis and information is verified and updated, if needed. = Unit-level 3. Each package is examined and a label with a bar code is printed and applied. Customer-level 4. A truck is loaded with 400-500 packages and sent out for delivery. Batch-level 5. The company's headquarters does not handle any packages. Only the executive offices, HR and accounting are housed there. Organization-sustaining

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