Puresound Ltd manufactures MP3 players in its Brishbane plant. The following costs are budgeted for March.

_____________________________________________________ $4, 425 000

Raw materials and components ……………………………………. 900 000

Insurance, plant ……………………………………………………. 180 000

Electricity, machinery ………………………………………………. 90 000

Electricity, light ……………………………………………………. 915 000

Engineering design ……………………………………………… 1 050 000

Depreciation, plant ………………………………………………. 2 100 000

Depreciation, machinery …………………………………………… 60 000

Security wages, plant ……………………………………………… 225 000

Equipment maintenance, wages …………………………………… 45 000

Setup wages ……………………………………………………….. 60 000

Inspection of finished goods ……………………………………… 45 000

Property taxes ……………………………………………………. 180 000

Natural gas, heating ……………………………………………….. 45 000

Required:

1. Assign the costs to the materials-related, machinery-related, set up, inspection, engineering and facility-sustaining activities and calculate the total cost of each activity.

2. Identify an activity driver suitable for assigning each activity’s costs to products?



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