how-would-you-recommend-recording-each-of-these-costs

Lavish Lamps produces high-quality lighting fixtures in its manufacturing plant. The fixtures are designed and manufactured according to the customer’s specifications and are therefore made-to-order. The plant manager has provided you with the following list of key activities within the plant:

  • Product design
  • Production scheduling
  • Purchasing department
  • Receiving department
  • Machine set-up
  • Quality control
  • Plant security
  • Customer credit check
  • Machine operation
  • Maintenance

Required:

For each of these activities:

  • Identify a cost object and a cost driver.
  • How would you recommend recording each of these costs?
  • How should these costs be allocated to lighting fixtures?

500-750 words

Explain the strategic application of different methods of cost allocation.

Describe the strategic application of different methods of cost allocation.

Identify the cost behaviors of different costs and develop estimates for product and operational costs based upon those behaviors.