23. LO.

3 (Levels of costs) The following costs are incurred in a fast-food restaurant that relies on computer-controlled equipment to prepare customers food. Classify each cost as unit level (U), batch level (B), product/process level (P), or organizational level (O): Unit Level: Cardboard boxes for food order Product / Process Level: Refrigeration of raw materials Organizational Level: Maintenance of the restaurant building Store managers salary Depreciation on equipment Property taxes Batch Level: Deep-fat fryer oil (changed every 4 hours)

Electricity expense for the pizza oven

Electricity expense for the pizza oven if left on all the time Wages of employees who clear & clean tables

French fries Per Order 31. LO.4 (ABC) Briones Books is concerned about the profitability of its regular dictionaries. Company managers are considering producing only the top-quality, handsewn dictionaries with gold-edged pages. Briones is currently assigning the $2,000,000 of overhead costs to both types of dictionaries based on machine hours. Of the overhead, $800,000 is utilities related and the remainder is primarily related to quality control inspectors salaries. The following information about the products is also available: Number Produced 2,000,000 1,400,000 Machine Hours 170,000 30,000 Inspection Hours 10,000 50,000 Revenues $6,400,000 $5,600,000 Direct Costs $5,000,000 $4,400,000

Regular: Hand Sewn:

a. Determine the total overhead cost assigned to each type of dictionary using the current allocation system. b. Determine the total overhead cost assigned to each type of dictionary if more appropriate cost drivers were used. c. Should the company stop producing the regular dictionaries? Explain.