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How can the concept of batch-level activites be applied to anairline? More specifically, what are two examples of unit-levelactivies for JetBlue? What steps has JetBlue taken to manage theseunit-level activities more efficiently?

How can the concept of batch-level activities be appoied to anairline? What are two examples of batch-level activities forJetBlue? What steps has JetBlue taken to manage these batch-levelactivities more efficiently?

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Trinidad Tremblay
Trinidad TremblayLv2
28 Sep 2019

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EXERCISE 7-12 Activity Measures [L07-1] Various activities at Ming Corporation, a manufacturing company, are listed below. Each activity has been classified as a unit-level, batch-level, product-level, or customer-level activity. Level of Activity Examples of Activity Measures Activity a. Direct labor workers assemble a product ..... b. Products are designed by engineers ..... c. Equipment is set up ............. d. Machines are used to shape and cut materials ... e. Monthly bills are sent out to regular customers ....... f. Materials are moved from the receiving dock to production lines ........ g. All completed units are inspected for defects ........ Unit Product Batch Unit Customer Batch Unit Required: Complete the table by providing an example of an activity measure for each activity.

Unit- and Batch-Level Cost Drivers
KC, a fast-food restaurant, serves fried chicken, fried fish, andFrench fries. The managers have estimated the costs of a batch offried chicken for KC's all-you-can-eat Friday Fried Fiesta. Eachbatch must be 100 pieces. The chicken is precut by the chainheadquarters and sent to the stores in 10-piece bags. Each bagcosts $3. Preparing a batch of 100 pieces of chicken with KC'sspecial coating takes one employee two hours. The current wage rateis $8 per hour. Another cost driver is the cost of putting freshoil into the fryers. New oil, costing $3, is used for eachbatch.

Round answers to two decimal places, when applicable.

(a) Determine the cost of preparing one batch of 100pieces.
$Answer

(b) If management projects that it will sell 300 pieces of friedchicken, determine the total batch and unit costs.

Batch cost $Answer

Unit cost $Answer

(c) If management estimates the sales to be 250 pieces,determine the total costs.

$Answer

(d) How much will the batch costs increase if the governmentraises the minimum wage to $10 per hour?
$Answer

(e) If management decided to reduce the number of pieces in abatch to 50, determine the cost of preparing 250 pieces. Assumethat the batch would take half as long to prepare, and managementwants to replace the oil after 50 pieces are cooked.

$Answer

In this case, management needs assistance in evaluating andclassifying costs identified within Glaser Health Products in orderto implement an activity-based costing system. Please addressQuestions 1 through 6 at the end of the case. Based on the casequestions, you are required to provide a two to four double-spacedwritten report providing management with the necessary guidance inimplementing an activity-based costing system. The written reportshould be properly formatted according to APA guidelines anddemonstrate research and critical thinking skills. Explanations andrecommendations should be supported by at least 3 scholarly sourcesfrom the Ashford Library or other external sources, excluding thetextbook.

For Questions 1 through 3, create a chart to classify andidentify 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 thechart should be included within the written report, supported byreferences to the appendix.

Questions 4 through 6 should be addressed in fully developedexplanations/instructions as part of your written report. Thewritten analysis should be supported by at least three scholarlysources, excluding the textbook.

CASE 5A -- GLASER HEALTH PRODUCT​:

Glaser Health Products of Ranier Falls, Georgia, is organizedfunctionally into three divisions: Operations, Sales, andAdministrative. Purchasing, receiving, materials and productioncontrol, manufacturing, factory personnel, inventory stores, andshipping activities are under the control of the vice-president foroperations, George Gottlieb. Advertising, market research, andsales are the responsibility of the vicepresident for sales, JakeBogan. Accounting, budgeting, the firm's computer center, andgeneral office management are delegated to the corporate controller(Administrative), Charlie Kaplan. The following cost categories arefound 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 MachiningDepartment.

(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 theShipping Department.

(r) Supplies for Production Scheduling.

(s) Cost of repairing parts improperly manufacturedin the Machining Department.

(t) Paint for the Assembly Department.

(u) Heat, light, and power for the factory.

(v) Leasing of computer equipment for the AccountingDepartment.


Required:

1. Identify each of the costs with the appropriate division:Operations, Sales, Administrative.

2. Identify each of the costs with one of thefollowing: (a) Unit-levelactivities. (c) Product-levelactivities. (b) Batch-levelactivities. (d) Facility-level activities. Organize theseclassifications by division: Operations, Sales, Administrative.

3. Specify an appropriate cost driver for tracing costsassociated with the various levels of activities to the next costobjective or products, whichever is appropriate.

4. Glaser Health Products is interested in using activity-basedcosting to identify as many costs as possible with the products.These costs will be used for planning and control decisions ratherthan for inventory valuation. The controller decided that alloperation costs will be related to products but only those salesand administrative costs that are classified as unit-level,batch-level, or product-level costs
should be related to products. Using preliminary stage costdrivers, explain how individual items of costs will be traced toactivity groupings.

5. Using primary stage cost drivers, show how the costs shouldbe related to products.

6. Explain why it is necessary to use preliminary stage andprimary stage cost drivers.

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