Scenario 3: Lillie Manufacturing has a plant in Florida that has two support departments that both have limited activities performed by the departments. It has three production departments that build two simple products. This plant employs 100 people in the production facility and has two 8-hour shifts running five days a week.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require, aiming to provide more accurate product costing.

Production Departments

Production departments are specific areas within a manufacturing facility where the actual production of goods takes place, often characterized by specialized operations or tasks.