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Attraction Corporation produces specially machined parts. The parts are produced

ID: 2546638 • Letter: A

Question

Attraction Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space. Costs have been assigned to each activity using direct tracing and resource drivers:

Engineering

$1,000,000

Setups

900,000

Machining

2,000,000

Inspection

800,000

Providing space

250,000

Providing utilities

180,000

Activity drivers for each activity have been identified and their practical capacities listed:

Machine hours

25,000

Setups

200

Engineering hours

5,000

Inspection hours

2,500

The costs of facility-level activities are assigned using machine hours.

What is (are) the unit-level activity(ies)?

setups

providing space

machining

engineering

Engineering

$1,000,000

Setups

900,000

Machining

2,000,000

Inspection

800,000

Providing space

250,000

Providing utilities

180,000

Explanation / Answer

Machining is the unit-level activity Option C is correct