Costs and Cost Allocation
Lavish Lamps produces high-quality lighting fixtures in its manufacturing plant. The fixtures are designed and manufactured according to the customer’s specifications and are therefore made-to-order. The plant manager has provided you with the following list of key activities within the plant:
Product design
Production scheduling
Purchasing department
Receiving department
Machine set-up
Quality control
Plant security
Customer credit check
Machine operation
Maintenance
Required:
For each of these activities:
Identify a cost object and a cost driver.
How would you recommend recording each of these costs?
How should these costs be allocated to lighting fixtures?

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