Lavish Lamps

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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