Question

Consider the following activities that take place in a veterinary clinic. (a.) Cleaning cages. (b.) Heating and air conditioning the clinic. (c.) Sending blood work to a lab. (d.) Dispensing medicine. Which of the following statements is true? A. Sending blood work to a lab is a facility level activity. B. Dispensing medicine is a facility level activity. C. Service entities cannot use ABC for overhead allocation. D. Heating and air conditioning the clinic is a facility level activity. E. Cleaning cages is a facility level activity

Answer 1

Answer: D. Heating and air conditioning the clinic is a facility level activity.

Step-by-step explanation:

Facility Level Activities affect the entire operations/ facility of a firm and as such cannot be apportioned or traced to the individual products that the company makes. They are thus fixed and do not vary with production level.

From the above options, Heating and Air Conditioning the clinic affects the entire facility and cannot be apportioned to the services that the veterinary clinic offers. As such it is indeed a Facility Level Activity.