MINI CASE $1$: Chapter $2$

Ken Boyle has invented a new type of tree branch clipper. After considering the sales volume potential for his new product, Ken decided to leave his $$2,200$ per month job as a power line technician to produce and sell the clipper through his new company, EasyClip. Ken will rent a small building that will be used to produce the new product. The rent will be $$1,400$ per month and he will rent production equipment at a cost of $$800$ per month.

The cost of materials for each clipper will be $$10\mathrm{.}25.$ Production employees will be hired to assemble the clippers. They will be paid $$1\mathrm{.}40$ for each completed unit. Ken will rent a small suite in an office building for use as his sales office. The rent will be $$750$ per month. An important part of his strategy is to keep costs low. This is accomplished by hiring a part$-$time purchasing agent to search for low$-$cost sources of materials $($wood and metal$)$ used in the production of the clippers. This person will be paid $$1,350$ per month. In addition, he has added voice messaging to his cellphone plan to get after$-$hours messages from customers. The addition of voice messaging will increase his monthly cellphone bill by $$5.$

Ken keeps surplus cash in a high$-$interest savings account in which he earns on average $$1,800$ per year. The business requires an up$-$front cash investment by Ken, who will use the balance in his high$-$interest savings account to address this need. To sell his clippers, he will use the local newspaper to advertise in the local area. The advertising costs will be $$450$ per month. In addition, he will pay a sales commission of $$0\mathrm{.}65$ for each clipper sold. No salary will be taken by Ken in the foreseeable future. He has already paid the legal and filing fees to incorporate his business. These fees amounted to $$900.$

Question: Some of the costs you listed above would be classified as manufacturing overheard and must be allocated to a cost object. What is the cost object in Ken$$s company and what would be a reasonable and convenient method to allocate these costs?