In this case, management needs assistance in evaluating and classifying costs id
ID: 2415136 • Letter: I
Question
In this case, management needs assistance in evaluating and classifying costs identified within Glaser Health Products in order to implement an activity-based costing system. Please address Questions 1 through 6 at the end of the case. Based on the case questions, you are required to provide a two to four double-spaced written report providing management with the necessary guidance in implementing an activity-based costing system. The written report should be properly formatted according to APA guidelines and demonstrate research and critical thinking skills. Explanations and recommendations should be supported by at least 3 scholarly sources from the Ashford Library or other external sources, excluding the textbook.
For Questions 1 through 3, create a chart to classify and identify a cost driver for each of the costs provided in the text. The chart should be included as an appendix to the written report. Explanations of the classifications and identifications within the chart should be included within the written report, supported by references to the appendix.
Questions 4 through 6 should be addressed in fully developed explanations/instructions as part of your written report. The written analysis should be supported by at least three scholarly sources, excluding the textbook.
CASE 5A -- GLASER HEALTH PRODUCT:
Glaser Health Products of Ranier Falls, Georgia, is organized functionally into three divisions: Operations, Sales, and Administrative. Purchasing, receiving, materials and production control, manufacturing, factory personnel, inventory stores, and shipping activities are under the control of the vice-president for operations, George Gottlieb. Advertising, market research, and sales are the responsibility of the vicepresident for sales, Jake Bogan. Accounting, budgeting, the firm's computer center, and general office management are delegated to the corporate controller (Administrative), Charlie Kaplan. The following cost categories are found in the company as a whole:
(a) Depreciation on factory equipment.
(b) Depreciation on office equipment.
(c) Depreciation on factory building.
(d) Advertising manager's salary.
(e) Assembly foreman's salary.
(f) Salespersons' salaries.
(g) Salespersons' travel expenses.
(h) Supplies for the Machining Department.
(i) Advertising supplies used.
(j) Electricity for the Assembly Department.
(k) Lost materials (scrap) in a Machining Department.
(l) Direct labor in the Assembly Department.
(m) Supplies for the sales office.
(n) Sales commissions.
(o) Packing supplies.
(p) Cost of hiring new employees.
(q) Payroll fringe benefits for workers in the Shipping Department.
(r) Supplies for Production Scheduling.
(s) Cost of repairing parts improperly manufactured in the Machining Department.
(t) Paint for the Assembly Department.
(u) Heat, light, and power for the factory.
(v) Leasing of computer equipment for the Accounting Department.
Required:
1. Identify each of the costs with the appropriate division: Operations, Sales, Administrative.
2. Identify each of the costs with one of the following: (a) Unit-level activities. (c) Product-level activities. (b) Batch-level activities. (d) Facility-level activities. Organize these classifications by division: Operations, Sales, Administrative.
3. Specify an appropriate cost driver for tracing costs associated with the various levels of activities to the next cost objective or products, whichever is appropriate.
4. Glaser Health Products is interested in using activity-based costing to identify as many costs as possible with the products. These costs will be used for planning and control decisions rather than for inventory valuation. The controller decided that all operation costs will be related to products but only those sales and administrative costs that are classified as unit-level, batch-level, or product-level costs
should be related to products. Using preliminary stage cost drivers, explain how individual items of costs will be traced to activity groupings.
5. Using primary stage cost drivers, show how the costs should be related to products.
6. Explain why it is necessary to use preliminary stage and primary stage cost drivers.
Explanation / Answer
Ans 1 Depreciation on factory equipment. Operations (b) Depreciation on office equipment. Administrative (c) Depreciation on factory building. Administrative (d) Advertising manager's salary. Sales (e) Assembly foreman's salary. Operations (f) Salespersons' salaries. Sales (g) Salespersons' travel expenses. Sales (h) Supplies for the Machining Department. Operations (i) Advertising supplies used. Sales (j) Electricity for the Assembly Department. Operations (k) Lost materials (scrap) in a Machining Department. Operations (l) Direct labor in the Assembly Department. Operations (m) Supplies for the sales office. Sales (n) Sales commissions. Sales (o) Packing supplies. Operations (p) Cost of hiring new employees. Administrative (q) Payroll fringe benefits for workers in the Shipping Department. Administrative (r) Supplies for Production Scheduling. Operations (s) Cost of repairing parts improperly manufactured in the Machining Department. Operations (t) Paint for the Assembly Department. Operations (u) Heat, light, and power for the factory. Operations (v) Leasing of computer equipment for the Accounting Department. Administrative Ans 2 Depreciation on factory equipment. Operations Facility level (e) Assembly foreman's salary. Operations Facility Level (h) Supplies for the Machining Department. Operations Unit level (j) Electricity for the Assembly Department. Operations Unit level (k) Lost materials (scrap) in a Machining Department. Operations Unit level (l) Direct labor in the Assembly Department. Operations Unit level (o) Packing supplies. Operations Batch Level (r) Supplies for Production Scheduling. Operations Unit level (s) Cost of repairing parts improperly manufactured in the Machining Department. Operations Product level (t) Paint for the Assembly Department. Operations Facility level (u) Heat, light, and power for the factory. Operations Facility level (d) Advertising manager's salary. Sales Facility Level (f) Salespersons' salaries. Sales Product level (g) Salespersons' travel expenses. Sales Facility Level (i) Advertising supplies used. Sales Facility Level (m) Supplies for the sales office. Sales Unit level (n) Sales commissions. Sales Product level (c) Depreciation on factory building. Administrative Facility Level (b) Depreciation on office equipment. Administrative Facility Level (p) Cost of hiring new employees. Administrative Facility Level (v) Leasing of computer equipment for the Accounting Department. Administrative Facility Level (q) Payroll fringe benefits for workers in the Shipping Department. Administrative Facility Level Ans 3 (a) Depreciation on factory equipment. NUMBER OF UNITS (b) Depreciation on office equipment. NUMBER OF UNITS (c) Depreciation on factory building. NUMBER OF YEARS (d) Advertising manager's salary. NUMBER OF ADVERTISEMENTS DEVELOPED (e) Assembly foreman's salary. NUMBER OF UNITS ASSEMBLED (f) Salespersons' salaries. NUMBERT OF UNITS SOLD (g) Salespersons' travel expenses. NUMBER OF CUSTOMERS CONTACTED (h) Supplies for the Machining Department. NUMBER OF UNITS PRODUCED/MACHINED (i) Advertising supplies used. NUMBER OF ADVERTISEMENTS DEVELOPED (j) Electricity for the Assembly Department. NUMBER OF MACHINE HOURS (k) Lost materials (scrap) in a Machining Department. VOLUME OF SCRAP (l) Direct labor in the Assembly Department. NUMBER OF UNITS ASSEMLED (m) Supplies for the sales office. NUMBER OF CUSTOMER ORDERS PROCESSED (n) Sales commissions. NUMBER OF UNITS SOLD (o) Packing supplies. NUMBER OF UNITS PACKEGED (p) Cost of hiring new employees. NUMBER OF NEW EMPLOYEES (q) Payroll fringe benefits for workers in the Shipping Department. NUMBER OF EMPLOYEES IN SHIPPING (r) Supplies for Production Scheduling. NUMBER OF SCHEDULES PRODUCED (s) Cost of repairing parts improperly manufactured in the Machining Department. NUMBER OF PARTS IMPROPERLY MANUFACTURED (t) Paint for the Assembly Department. VOLUME OF PAINT USED (u) Heat, light, and power for the factory. NUMBER OF SQUARE FEET USED (v) Leasing of computer equipment for the Accounting Department. NUMBER OF HOURS USED There are various subparts of each question but still I have answere the first three
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