Choose two activities or accounts from each of the four classifications and explain why you agree or disagree with the ABC project team’s classification.
Carrier Corporation for each of the activity levels the definitions that include:
· Unit: occurs every time a unit is produced. For example utility cost for production equipment. It more often than not relates directly to production volume
· Batch: performed for each batch acquired as well as produced. For example, moving raw materials between the production line and stock room, besides setting-up a machine for a run.
· Product-sustaining: performed towards maintaining product designs, parts, models, and processes. For example, maintaining materials bill, expediting parts and issuing product changes orders. To support key manufacturing capability besides process, sustaining activities are mandatory.
· Facility: performed towards enabling production. Therefore, at the most basic level they are fundamental towards supporting the business entity. For example cleaning and managing the structure.
Without a doubt, these definitions are consistent with those provided in the chapter. An argument for the ABC project team’s classification would be that the activity was characterized by the activity-level classification definition. An argument against the ABC project team’s classification would be that the specific activity did not satisfy the definition. For instance, conveying materials is a batch-level activity for the reason that a raw material should be shifted to the product location whenever a production batch besides run is commenced. Whereas, a facility-level account includes depreciation since plant and equipment correspond to the production facilities provision cost in which manufacturing can occur.