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CASE 5A -- GLASER HEALTHPRODUCTS

Glaser HealthProducts of Ranier Falls, Georgia, is organized functionally intothree divisions: Operations, Sales, and Administrative. Purchasing,receiving, materials and production control, manufacturing, factorypersonnel, inventory stores, and shipping activities are under thecontrol of the vice-president for operations, George Gottlieb.Advertising, market research, and sales are the responsibility ofthe vice-president for sales, Jake Bogan. Accounting, budgeting,the firm's computer center, and general office management aredelegated to the corporate controller (Administrative), CharlieKaplan. The following cost categories are found in the company as awhole: (a) Depreciation on factory equipment. (b) Depreciation onoffice 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 suppliesused. (j) Electricity for the Assembly Department. (k) Lostmaterials (scrap) in a Machining Department. (l) Direct labor inthe Assembly Department. (m) Supplies for the sales office. (n)Sales commissions. (o) Packing supplies. (p) Cost of hiring newemployees. (q) Payroll fringe benefits for workers in the ShippingDepartment. (r) Supplies for Production Scheduling. (s) Cost ofrepairing parts improperly manufactured in the MachiningDepartment. (t) Paint for the Assembly Department. (u) Heat, light,and power for the factory. (v) Leasing of computer equipment forthe Accounting Department.

Question: Gaser Health Products is interested in using activity-based costingto identify as many costs as possible with the products. Thesecosts will be used for planning and control decisions rather thanfor inventory valuation. The controller decided that all operationcosts will be related to products but only those sales andadministrative costs that are classified as unit-level,batch-level, or product-level costs should be related to products.Using preliminary stage cost drivers, explain how individual itemsof costs will be traced to activitygroupings.

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Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

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CASE 5A -- GLASERHEALTH PRODUCTS:

Glaser Health Products of Ranier Falls,Georgia, is organized functionally into three divisions:Operations, Sales, and Administrative. Purchasing, receiving,materials and production control, manufacturing, factory personnel,inventory stores, and shipping activities are under the control ofthe vice-president for operations, George Gottlieb. Advertising,market research, and sales are the responsibility of thevice-president for sales, Jake Bogan. Accounting, budgeting, thefirm's computer center, and general office management are delegatedto the corporate controller (Administrative), Charlie Kaplan. Thefollowing cost categories are found in the company as a whole: (a)Depreciation on factory equipment. (b) Depreciation on officeequipment. (c) Depreciation on factory building. (d) Advertisingmanager's salary. (e) Assembly foreman's salary. (f) Salespersons'salaries. (g) Salespersons' travel expenses. (h) Supplies for theMachining Department. (i) Advertising supplies used. (j)Electricity for the Assembly Department. (k) Lost materials (scrap)in a Machining Department. (l) Directlabor in the Assembly Department. (m) Supplies for the salesoffice. (n) Sales commissions. (o) Packing supplies. (p) Cost ofhiring new employees. (q) Payroll fringe benefits for workers inthe Shipping Department. (r) Supplies for Production Scheduling.(s) Cost of repairing parts improperly manufactured in theMachining Department. (t) Paint for the Assembly Department. (u)Heat, light, and power for the factory. (v) Leasing of computerequipment for the Accounting Department. <?xml:namespace prefix= o ns = "urn:schemas-microsoft-com:office:office" />


Question: Identify each of the costswith the appropriate division: Operations, Sales, andAdministrative & Identify each of the costs with one of thefollowing: (a) Unit-level activities. (b) Product-level activities.(C) Batch-level activities. (d) Facility-level activities. Create achart to classify.

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 PRODUCTҀ‹:

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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