Exercise 2 Cost hierarchy. Forrester, Inc., manufactures karaoke machines for several well-known companies. The machines...
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Exercise 2 Cost hierarchy. Forrester, Inc., manufactures karaoke machines for several well-known companies. The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were incurred in 2014: A. Indirect manufacturing labor costs such as supervision that supports direct manufacturing labor, $825,000. B. Procurement costs of placing purchase orders, receiving materials, and paying suppliers related to the number of purchase orders placed, $525,000. C. Cost of indirect materials, $160,000. D. Costs incurred to set up machines each time a different product needs to be manufactured, $365,000. E. Designing processes, drawing process charts, and making engineering process changes for products, $287,500. as F. Machine-related overhead costs such depreciation, maintenance, and production engineering, $950,000 (These resources relate to the activity of running the machines.) G. Plant management, plant rent, and plant insurance, $512,000 Required: Classify each of the preceding costs as output unit-level, batch-level, product-sustaining, or facility- sustaining
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