EXERCISE 7-1 ABC Cost Hierarchy L07-1 The following activities occur at Greenwic

Question

EXERCISE 7-1 ABC Cost Hierarchy L07-1 The following activities occur at Greenwich Corporation, a company that manufactures a variety of products. a Receive raw materials from suppliers. b. Manage parts inventories. c. Do rough milling work on products. d. Interview and process new employees in the personnel department. e. Design new products. f. Perform periodic preventive maintenance on general-use equipment. g. Use the general factory building. h. Issue purchase orders for a job. Required: Classify each of the activities above as either a unit-level, batch-level, product-level, or organization-sustaining activity

Explanation / Answer

a. Receive raw materials from suppliers: Batch-level

b. Manage parts inventories: Product-level

c. Do rough milling work on products: Unit-level

d. Interview and process new employees in the personnel department: Organization-sustaining

e. Design new products: Product-level

f. Perform periodic preventive maintenance on general-use equipment: Organization-sustaining

g. Use the general factory building: Organization-sustaining

h. Issue purchase orders for a job: Batch-level

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