Question

May Production Company, which uses activity-based budgeting, is in the process of preparing a manufacturing overhead budget. Which of the following would likely appear on that budget?

A. Batch-level costs: Production setup.
B. Unit-level costs: Depreciation.
C. Unit-level costs: Maintenance.
D. Product-level costs: Insurance and property taxes.
E. Facility and general operations-level costs: Indirect material.

Answer 1

On a manufacturing overhead budget using activity-based budgeting, costs like batch-level costs, unit-level costs, product-level costs, and facility and general operations-level costs would likely appear.

Step-by-step explanation:

On a manufacturing overhead budget prepared using activity-based budgeting, the following costs would likely appear:

1. Batch-level costs: Production setup. These costs are incurred each time a batch of the product is produced, such as the cost of setting up the production equipment for a specific batch.
2. Unit-level costs: Maintenance. These costs are incurred for each unit of the product produced, such as the cost of maintenance for the production equipment.
3. Product-level costs: Insurance and property taxes. These costs are related to specific products or product lines and are not dependent on the number of units produced.
4. Facility and general operations-level costs: Indirect material. These costs are incurred for the overall operation of the facility, such as the cost of indirect materials used in the production process.