EXERCISE 8-15 (15 MINUTES)

1. and 2.

Activity Activity Level Possible Activity Measures

a. Machine settings are changed between

batches of different products. Batch-level Number of batches; time to

change settings

b. Parts inventories are maintained in the

storeroom. Product-level Number of part types maintained

in stock

c. Products are milled on a milling machine Unit-level Machine-hours; labor-hours

d. New employees are hired by the per-

sonnel office. Organization-

sustaining Not applicable*

e. New products are designed. Product-level Hours of design time

Organization-

f. Periodic maintenance is performed on

general-purpose production equip-

sustaining Not applicable*

ment.

g. A bill is sent to a customer who is late in

making payments. Customer-level Number of bills

h. Yearly taxes are paid on the company’s

facilities. Organization-

i. Purchase orders are issued for materials

to be used in production. Batch-level Number of purchase orders

* Organization-sustaining costs should not be allocated to products or customers.

Note: Some of these classifications and activity measures are debatable.