Chapter 13 Support activity cost a ction Takes Gems mines and produces can be and others. The gems are produced by way of the Mining and Cutting these production activities we supported by the Maintenance and Security activities Security costs related to the production activities based on value. Maintenance cos e normally located based on machine hours. However, Maintenance costs typically correlate more with the number of service formation regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service cat's 17 Machine hours 182 176 Asset value $200.000 $60,000 $300,000 $300,000 Department cost $25.000 42,500 $160,000 $95.000 1. Is the process of locating tenance costs based on machine hours correct Identity the measure than can possibly be used to allocate the maintenance costs Meatures that can possibly be used to allocate the maintenance costs Number of service calls b. Asset value c Department cost None of the above 2. Based on your response to part ing the recerca rices the most appropriate cost driver for Maintenance de the Maintenance Department cost octed from each Security Mining Department Department porttity to the other act Cutting Department Security cost afecation located from each support activity to the other activities 3. Assume lake's Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Determine the total costs Mining Cutting Particulars Department Department Security cost Production activities total cost Is i Viable for the company to choose the direct method of cost allocation? Which of the following supports your answer? 3. The Grect cost allocation method is too simple and it is not accurate, b. The difference between the direct cost allocation method and the reciprocal method is minimal and the direct method is easie c. The reciprocal method of cost allocation is more accurate and easier than the direct method. d. None of the above Check My work more Check My Wort r inn