1. Job Cost Of Job Costing
Introduction
Accounting to determine which items or jobs are generating the most net income can be extremely important to financial managers in today's economy.
Managers must determine which products are making performing the best so that they can capitalize on profits. This also helps to know when it should
cut its losses. There are three very useful methods of identifying costs associated to a particular item which are job order costing, activity based
costing (ABC), process costing. Job order costing isolates costs to a particular job. ABC compares multiple items which are manufactured. Process
costing assesses items which are massed produced and provides analysis to the cost through the various stages from beginning to completion. This
essay will explain each of these methods and then provide examples for each of them.
Job Order Costing
Job costing is a method of calculating the amount of dollars that it will take to perform a job in its entirety for the entity performing the work. Job
costing is a valuable tool for managers of financial information in a company because it is an efficient way of learning which jobs have made money
and which jobs have lost money. This is because the job costing method can trace or link how much resource such as labor, material, and overhead are
spent to complete the job. Steven Bragg states that "Job costing is the most common method for marshaling cost accounting information into a data
structure containing usable information". He then
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2. Abc Is a Better Principle Than Traditional Cost System
[pic]
Activity–based costing (ABC) is a better principle for companies than a traditional cost system. Discuss.
Student Name: Zhang Ruoshi Assignment Title: Essay Module Code: LZ118–122 Module Teacher: Rebecca
Manufacturing is one of the company 's core processes, while accounting is the key impact for enterprise to produce good products. Activity–Based
Costing (ABC) is a new method of costing system. This method can help a company to allocate costs more accurately in today 's complex business
world. In contrast to traditional cost system which is not suited to new manufacturing environment situation, ABC has taken the place of tradition
system and been widely used in some countries, ... Show more content on Helpwriting.net ...
They can contrast the profits which are brought by a variety of customers, products, brands or regions. Afterward, they can choose the most profitable
ones (Cooper and Kaplan, 1991 p.130–135).
Innes and Mitchell (1995) explored the adoption rate of ABC and how well does this system work in some large companies of UK. Innes and
Mitchell (1995) undertook a survey of ABC practice in 1000 of the largest companies in the U.K. which are listed in The Times 1000 which was
published in 1994. Nevertheless, the results showed that ABC system's impact is often limited and it has also been refused by a high percentage. The
survey also considered both the company sector and size. Most of the companies have to make decisions on its use. There is still possibility for
considerable increasing in its adoption. ABC is an on–going development, it gives considerable chances for researches who are interested in changing
to pursue work different kinds of management accounting' area. (Innes and Mitchell, 1995) This survey proves that ABC has been adopted by some
U.K. companies and these companies are trying to use ABC to make big progress. On the other hand, the results also show that, at a practical level,
opinions on ABC are differed among the U.K.'s large companies.
In contrast to the survey of largest companies in the U.K., Douglas (1999) investigated how to make ABC work in the small and mid–sized
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3. Production Overheads Based On Direct Labour Hours Essay
Costing
At present PC4U apportions its production overheads based on direct labour hours. With a range of products available and opportunity for customising
these products individually to meet the retailer's needs, this report aims to assess the effectiveness of this traditional method of allocating production
overheads. It will discuss the drawbacks of the current approach used by PC4U, as well as an alternative approach in the Activity–Based Costing
system, which "is intended to overcome the weakness of the traditional method by having various pools of costs and then allocating each pool's costs
on the basis of its root cause."(Averkamp 2007) As well as comparing the benefits and drawbacks of these costing systems to determine what
recommendations should be given regarding the approach PC4U should adopt, the report shall also discuss the impact an activity based management
system may have on the company.
The current method of apportioning production overheads based on direct labour hours can be described as a traditional approach to product costing. In
a manufacturing company's financial statements, each item produced must be allocated some of the production overheads to make the statements
compliant. Sometimes the individual costs of these items can be calculated incorrectly based on overall production overhead and the system of
allocating in place, however the overall financial statement can still be accurate. This traditional method of allocating the production
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4. Cost Accounting Project
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[Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document
here. The abstract is typically a short summary of the contents of the document.]
compaq
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[Pick the date]
Contents
Concept of Cost Accounting..............................................................................03
Introduction..................................................................................................03
Traditional costing v/s activity based costing...........................................................04
Need for an Activity Based Costing.....................................................................06
Stages in Activity Based Costing.........................................................................08
Cost Drivers.................................................................................................09
Classification of ... Show more content on Helpwriting.net ...
With the help of case studies of Siemens Electric Motor Works, John Deere Component Works, and Schrader Bellows, Cooper (1989) demonstrated that
the 'management objectives' and 'diversity of product mix' determine the extent of the complexity in the design of activity–based cost management
systems. The competitive environment in which the firm is operating, drives the need for activity–based costing.
A well–designed integrated cost management system will help the management of the company to identify opportunities for continuous improvement
and point out unused capacity or capacity constraints, if any, and will facilitate the introduction of activity–based budgeting in the organization. The
activity–based budgeting mindset makes all cost variable and attempts to match resource supply with resource demand.
Activity based costing Activity Based Costing (ABC) is a two–stage product costing method that assigns costs first to activities and then to the
5. products based on each product 's use of activities. , ABC systems first accumulate overhead costs for each organizational activity, and then assign the
costs of the activities to the products, services, or customers (cost objects) causing that activity. Activity analysis is the processes of identifying
appropriate output measures of activities and resources (cost drivers) and their effects on the costs of making a product or providing a service.
In this way an
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6. Activity Based Costing
Robert S. Kaplan and Robin Cooper was designed the activity based costing (ABC) method in 1988. It was felt that there was a need for more
accurate and up–to–date information and a more proactive approach to planning and managing the costs. ABC is a process to identify the costs of all
activities and allocating, applying, assigning or tracing costs to products. Activity based costing is a costing technique, tool, system, mechanism or
approach. It may be used in addition to the current traditional system or used in place of it. This will enable the new system to be applied consistently
so that the opportunity to revert to old ways is limited. Activity based costing is aims to cost the products independent of output volume and to apply ...
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While, the top management in India firm they prefer to the cross–functional teams. It is the process orientation and adequate training to the employees
on the ABC. This process is the linkages work so it shows their initiative between activity–based team The top management support, technology
sophistication, large size firms, and integration with the financial system were the factors affecting the usage of the activity bases costing. The use of
activity based cost system is found to be positively correlated with the firm size. The organizational factors such as top management support,
'non–accounting ownership' and the training were found to be vital in the successful implementation of the activity–based costing. Before 1999, ABC
implementation in France had a highly detailed legislation covering how firms should managerially account for their transaction. Like in the USA,
ABC was facing difficult problems as a remedy for the crisis of management accounting. From 1991 to 1996, French scholars dedicated large amounts
of their writings to the method's costing aspects, among which the general architecture of the system and the translation or adaptation of specific
concepts, such as "cost driver", required to operate it.
In criticisms and evolutions of France was happen a few months after its importation by a network of pioneers, ABC faced a major controversy.
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7. Accounting 3320-001 Final Exam
FINAL EXAM REVIEW
ACCT 3320 –001
Spring 2015
I. FINAL EXAM TIME AND LOCATION:
Location: SB 2100
Time: 12:30 PM – 2:30 PM on Tuesday (May 05, 2015)
II. FINAL EXAM POLICY:
Please note the exam is closed book and closed note exam.
You are allowed to bring pens, a two–sided cheat sheet (8.5 x 11 inches), pencils, simple function calculators to the exam.
III. EXAM FORMAT:
There are 35 multiple choice questions including both conceptual and calculation questions.
The exam will be done through My Accounting Lab.
IV. FINAL EXAM COVERAGE
Final Exam covers the following chapters:
Chapter 4: Job Costing
Chapter 5: Activity–Based Costing and Activity–Based Management
Chapter 8: Flexible Budgets, Overhead Cost Variances, and... Show more content on Helpwriting.net ...
Mynarc uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company 's manufacturing
8. overhead data:
Budgeted output units675 truckloads
Budgeted fleet hours540 hours
Budgeted variable manufacturing overhead costs for 675 loads$82,350
Actual output units produced and delivered630 truckloads
Actual fleet hours436 hours
Actual variable manufacturing overhead costs$77,490
4. What is the flexible–budget amount for variable manufacturing overhead?
A) $83,025
B) $82,350
C) $76,860
D) $77,490
5. What is the flexible–budget variance for variable manufacturing overhead?
A) $4,860 favorable
B) $4,860 unfavorable
C) $630 favorable
D) $630 unfavorable
6. What is the budgeted variable manufacturing overhead cost per unit?
A) $183.00 per unit
B) $178.89 per unit
C) $119.25 per unit
D) $122.00 per unit
Answer the following questions 7–9 using the information below:
The Kenton Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was
collected for the month of June:
Direct Materials processed:18,000 gallons (after shrinkage)
Production:
10. Budget: Management and Budgeting
Introduction
What Is A Budget?
"A budget is a plan." More specifically, a budget is a plan of action matched by resources required to implement the plan. Budgets generally divide
between two broad categories: the operating budget, sometimes known as the "expense" budget and the capital budget. Budget in simple word means
a sum of money allocated for a particular purpose. Budget is there in everyone's life, it may be a small or a big one. Budget is a tool which helps in
controlling and planning the functions of an organization. It is formalized statements of the goals of an organization stated in financial terms and
accomplishes several important functions for managers. It states future projections of revenues, expenses and expected ... Show more content on
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Whereas bottom up budgeting method consists of lower level management prepares the budget and submit it to top management for approval. The main
task of this level is to formulate and disseminate the goals of the business, evaluate each department and integrate the various budgets submitted by
subunits into a total organizational budget.
The budgeting process should be flexible and based upon degree of goal accomplishment during the period and budgets for the next planning period
can be adjusted to help the management meet organizational goals. If the goals are changed then the budgets should also be changed.
Traditional Budget
Traditional budgeting is the process of budgeting which is in use for the past many years in the organizations. It is based upon single basis; mostly
indirect costs are distributed to all products and services. Often products which have higher volume are over costed. And the lower volume products are
often understated. It is incremental in nature; old techniques are used, have a short term view and mainly deal with smaller segments. Traditional
budgeting takes no account of the fact that income are uncertain, unplanned things arises, that social, political, economic situations change without
warning and stock markets rates moves unpredictably. Traditional budgeting is now outsourced in most organizations. This is due to the effect that
budgeting serves
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11. Activity Based Costing 12
Activity–Based Costing
Activity–Based Costing
Activity based costing (ABC) is a costing method that is designed to provide managers with cost information for strategic and other decisions that
potentially affect capacity. Activity based costing is a subset of activity–based management. Activity based costing is used to determine product costs
and for internal decision–making and for managing activities. Traditional Absorption costing is for external financial reporting.
Activity–based costing is a suitable and appropriate method for companies with multiple products or services who are having problem of inaccurate
costing information and need to know which products are really profitable and which are the one that is making loss. For ... Show more content on
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Secondly, these activities are traced to the products, services, or customers for whom the activity is performed.
In conclusion, ABC stands out by breaking down the costs into a very detailed level. This information will give management a very clear picture of
which processes come with high costs but little value and how to improve the process or to eliminate the process entirely. This method is suitable for
use when there is high overhead, complex product and in very competitive market.
Difference between Activity–Based Costing and Traditional Absorption approach
Activity based costing systems accumulate costs into activity cost pools. These are designed to match to the major activities or business processes. The
costs in each cost pools are largely caused by a single factor called the cost driver. Whereas in traditional costing, systems accumulate costs into
facility–wide or department cost pools. The costs in each cost pool are different. There are many costs of different processes, which are not caused by
a single factor.
Activity based costing systems allocate costs to products, services, and other cost objects from the activity cost pools using allocation bases
corresponding to cost drivers of activities cost. Whereas in traditional costing, systems allocate to products using volume–based allocation bases, for
example, units, direct labor, machine hours or revenue dollars.
In terms of hierarchy of costs, activity based costing allows for
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12. Cost Method Paper
Running Head: Costing Methods Paper
Costing Methods Paper
Lavelle Haynes
ACC/561
February 14, 2011
Professor Micheal Gaspar
Super Bakery is a distinguished company created in 1990. The company has is a supplier of mineral, vitamin, and protein enriched doughnuts. The
strategy applied by the company is job order cost method. Job costing is a product costing system when costs are accumulated by specific job orders
and assigned to batches of products. In other words, manufacturing costs are assigned to specific job, specific customers, specific orders, specific
projects, and specific contracts. Job costing is preferable to small and medium–sized companies, such as professional services (e.g. medical, legal),
advertising ... Show more content on Helpwriting.net ...
The ABC method means that all the individual activities part of a process can be accurately cost. This is what Super Bakery needs to set the value of
the company based on the activities of individual assets (management, staff, manufacturing and warehouse). The activity– based cost system allows the
company to identify where high (and low) costs are being incurred and the cause. How can a company survive with a 20% growth rate in twenty
year duration? The desire to change was required and ABC is the best cost system for Super Bakery. The ABC method helps with future product
planning and the cost of all activities associated with a product or service can be accurately determined before it is launched. This can help with
determining pricing, and any associated expenditures of the company. The objective was to move from the concept of job cost system that the
company mimicked. The notion of job order is a disadvantage to Super Bakery. The order cost of its customers was at a fixed cost. The problem
exist as the orders with high margins subsidized low margins. Profit margins are not recognized by the cash flow produced by order. A process cost
system could be used by the company but will impose disadvantages. Process costing advantages include the ability for companies to create a cost for
products where it is difficult to track cost flows for each
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13. Acct745 Week 2
Running Head: ACTIVITY–BASED COSTING
Activity–Based Costing
Adriana Vlasin
Davenport University
ACCT745
Larry L. Simpson CPA, CGMA
March 1, 2015
Abstract
This paper provides a brief presentation of Activity–Based Costing methodology, how is used as well as its short comings.
Activity–Based Costing
Activity–based costing (ABC) methodology is an instrument designed to provide accountants and managers with valuable costing information that will
allow them to make sound strategic decisions. It is used as a secondary methodology rather than a replacement for the company's primarily costing
system. The ABC methodology identifies activities in an organization and for each activity it assigns a cost. The cost reflects the actual resource
consumption by each activity that has been identified.
Under a traditional system, overhead cost is allocated to an activity based on hours or rates for direct labor or machine usage. However, this approach
does not clearly indicate how much overhead cost will be needed in order to complete a job through a particular function. ABC methodology is to be
used as an alternative to traditional accounting where a business 's overhead costs (indirect costs such as electrical energy consumption for heating or
cooling, or indirect cost associated with marketing) are allocated as a proportion of direct costs, to an activity. This approach is unsatisfactory because
there can be cases where two activities could absorb the same direct costs
15. Process Costing
Process costing
Process costing is a system which mostly practices by a company whereby the manager of the company wants to know the cash flow from one
department to another. Process costing give a clarify information to managers, therefore this activities is very important.
Process costing is consisting of three ingredients which are direct materials, direct labor and manufacturing overhead. Direct material is the raw
material which needs to produce a product, for example rubber for shoes, plastics for straws and etc. direct labor is a person who work and complete
the product before it is completely produce. And manufacturing over head is about the indirect materials, indirect labor, and some indirect related to the
factory.
For ... Show more content on Helpwriting.net ...
In a weighted average method the equivalent units of production for a department are the number of units transferred to the next department of finished
goods plus the equivalent units in the department's ending work in process inventory.
First–in–First–out (FIFO) Method
The computation of equivalent units under FIFO method differs from weighted average method in two ways. First the units transferred out figure are
divided into two parts. One part consists of the units from beginning inventory that were completed and transferred out, and the other part consists of
the units that were both started and completed during the current period. Second full consideration is given to the amount of work expended during the
current period on units in the beginning work in process inventory as well as units the ending inventory. Thus, under the FIFO method, it is necessary
to convert both beginning and ending inventories to an equivalent unit basis. For the beginning inventory, the equivalent units represent the work done
to complete the units; for the ending inventory, the equivalent units represent the work done to bring the units to a stage of partial completion at the
end of the period (the same as with the weighted average method). The formula for computing equivalent units of production is more complex under
FIFO method than under weighted average
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16. Activity Based Costing And How It Works
I chose to write about activity based costing. I chose to write this paper because I wanted to know more about activity based costing and how it
works. According to our text, activity based costing (ABC) has received a lot of attention since the 90's. ABC has a lot of more details and can be
more complicated than all the other costing methods, however it's more accurate. "Costing systems are information systems. They require a specific
type of information such as direct labour hours and units produced, to be of value. It is from the input data that product costs and other information are
determined according to the specific costing system defined methodology. The results obtained would depend on the costing system used, since the
same input data could be used in different ways. In this case the traditional costing system or an activity based costing system" (Marx.) A costing
system should provide information to help minimize waste, but should not be wasteful in itself. In other words, the resources required to design,
implement and maintain a costing system should be less than the benefit derived from the use of the system (Marx.) "Activity based costing (ABC)
assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of
machine hours. Activity based costing first assigns costs to the activities that are the real cause of the overhead. It then assigns the cost of those activities
only to
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17. Compages And Disadvantages Of Costing Systems
Costing Systems
The costing systems aid companies in determining the cost of a product in relation to the revenue the product generates. The costing systems
commonly used in businesses include activity–based costing and traditional costing. Traditional costing system assigns the manufacturing overhead
based on the capacity of a cost driver. For example, the amount of direct working hours required to produce a particular item. Cost drivers are factors
that cause cost to incur, like machine hours, direct material hours, and direct labor hours. Activity–based costing system allocates cost of manufacturing
a product in accordance to the activities required to produce the particular item. It's therefore essential for managers to understand the merits ... Show
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For example, in a banking context, the activity of a bank teller is ascribed to each item through measuring how long each item transaction (cost driver)
takes at a counter and them measuring the number of each form of transaction. In a machinery context for the activity of running machinery, the driver
is often the machine operating hours i.e. machine operating hour's maintenance, power cost in the running of machinery and labor cost activities.
ABC systems use activities as the main cost objects. The system works on the notion that activities cause costs, and cost objects create demand for
activities. The system is flexible as it relates costs to customers, management responsibility and processor and not just the products. ABC system
applies activities as the basic cost objects while using the costs of such activities as the building blocks for compiling costs of other cost objects.
The application of activity based costing system embraces advanced planning, control and monitoring system that encompasses: activity based costing;
activity–based budgeting; activity reporting; activity–based cost management; performance benchmarking and measurement; customer/product and
sector profitability, business process re–engineering; and continuous
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18. Introduction. Muddled Is An Acfi2003 Student And As Many
Introduction
Muddled is an ACFI2003 student and as many others has problems with several aspects of the course including a fundamental principle, the differences
in the costing systems and cost management systems. The purpose of this essay is help Muddled understand the fundamental costing principle that
management systems should reflect the fact that different costs are relevant for different purposes, and how this principle affects the way that job costing
and process costing systems are designed. Along the way several costing concepts will be explained and laid out for Muddled to understand in a more
simplified method. The axiom will be covered first with particular reference to the costing systems, the differences between the job ... Show more
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2.2 Job Costing System vs. Process Costing System
The main differences between a job costing system and a process costing system can be summarised to the cost objects used, the size of the job and
production, identification of the product, whether work in progress is present at the start of the period, the method of cost accumulation used and when
cost are asserted.
2.2.1 Cost Objects
Muddled needs to understand that cost objects is something that is assigned costs and has a direct link to those costs.
Job costing systems are used by firms who make special orders or customised products with individual identities for each job with regards to singular
contract specifications. The cost object being the individual unit/s or product in that contract. This is due to each job using different amounts of
resources and is allocated specifically to the individual job, thus the specific job is the cost object that has the costs directly assigned to, at the
completion of the job.
Process costing systems are applied when there is a mass production of similar products, in a continuous flow; though one or multiple departments; thus
the products having no identity. The process or department used to make these products are assigned the costs at the end of a cost period rather
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19. The Costing Method Is An Accounting Process
A1. Costing Method Costing Method is an accounting process that assesses itemized input costs of production and fixed costs to determine overall
costs of production. (Kucera, n.d.) Competition Bikes is performing this analysis so management can determine the optimum sales units to breakeven
from its San Diego plant based on the current sales mix of 9 Titanium bicycles for every 5 CarbonLite bicycles produced. Traditional costing is an easily
implemented costing method that aligns with generally accepted accounting principles, GAAP. Traditional costing is the distribution of manufacturing
overhead costs across the number of products produced based or another volume based metric. Traditional costing is very simplistic in the fact that it
doesn't allocate out any nonmanufacturing costs. Traditional costing allocates costs to generic buckets such as direct material, direct labor and other
overhead. Activity based costing (ABC) was developed as a costing method to overcome the weaknesses of traditional costing. ABC allocates costs to
every activity, or manufacturing task, associated in the production of an item. ABC is more accurate than traditional costing. Competition Bikes
grouped the following as tasks associated with the manufacturing of bicycles; Factory Setups, Quality Control, Engineering Service, Product
Movements, Utilities, and Depreciation. (Johnson, n.d.) In Competition Bikes data analysis of traditional verses activity based costing, the differences
in costs is
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20. Sm Ch 17 Essay
CHAPTER 17
JOB ORDER COST SYSTEMS
AND OVERHEAD ALLOCATIONS
OVERVIEW OF BRIEF EXERCISES, EXERCISES, PROBLEMS, AND CRITICAL
THINKING CASES
Brief
Exercises
B. Ex. 17.1
B. Ex. 17.2
B. Ex. 17.3
B. Ex. 17.4
B. Ex. 17.5
B. Ex. 17.6
B. Ex. 17.7
B. Ex. 17.8
B. Ex. 17.9
B. Ex. 17.10
Topic
Accounting for overhead
Transferring costs
Overhead application rates
Actual and applied overhead
Selecting a cost system
Applying direct labor
Applying direct materials
Recording manufacturing costs
21. Selecting activity bases
Activity–based costing
Exercises
17.1
Topic
Accounting terminology
17.2
17.3
17.4
17.5
Understanding cost flows
Job costing journal entries
Overhead cost drivers
Real World: Granite Construction, Inc.
Cost classifications
Cost flow and ... Show more content on Helpwriting.net ...
Also, determine the cost of a particular job and record the sale of some of the finished goods.
30 Medium
17.5 A,B
Ye Olde Bump & Grind, Inc./Big Boomers
A service business (an automobile body and fender repair shop), rather than a manufacturing company, illustrates the use and computation of an
overhead application rate and the importance of selecting an appropriate overhead "cost driver."
35 Medium
17.6 A,B
Norton Chemical/Logan Pharmaceutical
23. Is Activity Based Costing ( Abc ) Essay
The first cost system of this part of this essay is activity–based costing (ABC). Cooper and Kaplan (1988) implemented ABC for taking care of issues
of Traditional costing frameworks.
For allocating costs, Tradtional costing uses a single number like the machine hours or the direct labour hour, also cost allocations are volume–based.
Comparing ABC with Traditional Costing Systems, ABC include all activities for a product, to making it easier to more accurately measure and allocate
costs (Cooper, 1990; Cokins, Strat–ton, & Helbling, 1993).
It moves away from assigning costs to individual products but rather to activities or processes, which allows for assigning a larger part of overhead
costs to specific cost units (Cooper & Kaplan, 1988; Friedman & Lyne, 1997).
Also important to know is that ABC define all the company activities as value adding or non–value adding activities (Cooper & Kaplan, 2005).
Non–value added activities create waste, result in postponement, add expenses to the items, or for which cost clients are not willing to pay. ABC helps
an association in discovering chances to streamline or lessen the expenses, or wipes out the whole movement, particularly if there is no esteem added
viewpoint to it (Drury, 2012).
Many have the believe that ABC is better than Traditional Costing because ABC say more about the driven costs, and can split on any single activity
and receives so more accurate cost details (Akyol, Tuncel, & Bayhan, 2007; Kee, 1995). As per this,
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24. Acct Chap 13 Kimmel
In January, Reyes Tool & Dye requisitions raw materials for production as follows: Job 1 $960, Job 2 $1,630, Job 3 $720, and general factory use
$680. During January, time tickets show that the factory labor of $6,100 was used as follows: Job 1 $1,570, Job 2 $1,940 Job 3 $1,670, and general
factory use $920. Prepare the job cost sheets for each of the three jobs. (If answer is zero, please enter 0, do not leave any fields blank.) Job 1 Date 1
/31 1/31 Direct Materials 960 0 Job 2 Date 1/31 1/31 Direct Materials 1630 0 Job 3 Date 1/31 1/31 Direct Materials 720 0 0 1670 Direct Labor 0 1,940
Direct Labor 0 1570 Direct Labor
In March, Hollaway Company completes Jobs 10 and 11. Job 10 cost $28,110 and Job 11 $32,630. On March 31, Job 10 is... Show more content on
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6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labor $20,000, and depreciation on factory machinery $8,000.
Current year 's costs Balance 1/1 Current year 's costs Current year 's costs
30,000 11,000 43,000 48,000
36,000 18,000 48,000 55,000
43,200 21,600 57,600 66,000
109,200 50,600 148,600 169,000
Correct.
Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. Hint: Use a single T account for Work in
Process Inventory. Calculate each of the following, then post each to the T account: (1) beginning balance, (2) direct materials, (3) direct labor, (4)
manufacturing overhead, and (5) completed jobs. Work in Process Inventory 1/1 Balance 128400 Completed Work Direct materials 121000 386200
Direct labor
25. 139000
Manufacturing overhead 166800
12/31 Balance
169000
Work in process balance
$ 169000
Unfinished job No. 7642
$ 169000
Account/Description Manufacturing overhead Cost of goods sold Actual overhead costs Incurred on account Indirect materials Indirect labor
Depreciation $120,000 14,000 20,000 8,000 $162,000 Applied overhead costs Job 7640 Job 7641 Job 7642 $43,200 57,600 66,000 $166,800 $162,000
166,800 $4,800
Debit 4,800
Credit
4,800
Actual overhead Applied overhead
Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold.
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26. Activity Based Costing
Topic Gateway Series
Activity Based Costing
Activity Based Costing
Topic Gateway Series No. 1
1
Prepared by Stephanie Edwards and Technical Information Service
Revised November 2008
Topic Gateway Series
Activity Based Costing
About Topic Gateways
Topic Gateways are intended as a refresher or introduction to topics of interest to CIMA members. They include a basic definition, a brief overview
and a fuller explanation of practical application. Finally they signpost some further resources for detailed understanding and research. Topic Gateways
are available electronically to CIMA Members only in the CPD Centre on the CIMA website, along with a number of electronic resources.
About the Technical Information ... Show more content on Helpwriting.net ...
While using such a simplistic volume measure to allocate overheads as an overall cost driver, this approach seldom meets the cause–and–effect criteria
desired in accurate cost allocation. This method of costing has become increasing inaccurate as the relative proportion of overhead costs has risen. This
distortion of costs can result in inappropriate decision making. ABC is therefore an alternative approach to the traditional method or arbitrary allocation
of overheads to product, services and customers.
27. Stage 1. Activity cost pools Material Handling
Stage 1. Activity cost pools Cost per material movement
OVERHEAD COSTS
Procurement
Cost per purchase order
Product lines
Set–up
Cost per set–up
Figure 1. Framework of activity based costing
4
Topic Gateway Series
Activity Based Costing
Application
In contrast to traditional cost accounting systems, ABC systems first accumulate overheads for each organisational activity. They then assign the costs
of these activities to products, services or customers (referred to as cost objects) causing that activity. The initial activity analysis is clearly the most
difficult aspect of ABC. Activity analysis is the process of identifying appropriate output measures of activities and resources (cost drivers) and their
effects on the costs of making a product or providing a service. ABC systems have the flexibility to provide special
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28. Process Costing
EXERCISE 3–1: Process Costing and Job–Order Costing [LO1]
Which method of determining product costs, job–order costing or process costing, would be more appropriate in each of the following situations? * a.
An Elmer's glue factory. * b. A textbook publisher such as McGraw
–Hill. * c. An Exxon oil refinery. * d. A facility that makes Minute Maid frozen
orange juice. * e. A Scott paper mill. * f. A custom home builder. * g. A shop that customizes vans. * h. A manufacturer of specialty chemicals. * i. An
auto repair shop. * j. A Firestone tire manufacturing plant. * k. An advertising agency. * l. A law office.
EXERCISE 3–2: Job–Order Costing Documents [LO2]
Cycle Gear Corporation ... Show more content on Helpwriting.net ...
* a. $80,000 in raw materials were purchased on account. * b. $71,000 in raw materials were requisitioned for use in production. Of this amount,
$62,000 was for direct materials and the remainder was for indirect materials. * c. Total labor wages of $112,000 were incurred. Of this amount,
$101,000 was for direct labor and the remainder was for indirect labor. * d. Additional manufacturing overheadcosts of $175,000 were incurred.
Required:
Record the above transactions in journal entries.
EXERCISE 5–1: Fixed and VariableCost Behavior
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the
variable cost per cup of coffee served is $0.22.
Required:
* 1. Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. Round
off the cost of a cup of coffee to the nearest tenth of a cent.
п‚· 2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week
increases? Explain.
EXERCISE 5–3: High–Low Method
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy–days over the
last year. An occupancy–day represents a room rented out
30. Advantages Of Traditional Costing System
Conventional Absorption Costing Systems or Traditional Costing System
It is a remarkable reality that the traditional costing systems use a solitary, volume–based cost driver. This is the motivation behind why the traditional
product costing system misshapes the expense of items or products. By and large, this kind of costing system appoints the overhead expenses to items
on the premise of their relative use of direct work. Thus, traditional cost systems frequently report incorrect product costs. The issue is in the basic
technique of the traditional costing systems. They stick to the supposition that items reason cost. Every time a unit of product is produced, it is
expected that cost be brought about.
This suspicion bodes well for certain ... Show more content on Helpwriting.net ...
For instance, a carrier may have sections like international operations, domestic operations, freight operations, and so forth while an auto producer may
have fragments like engine bicycles, autos, trucks, SUVS, and so on. Portions are cost focus, income focus, benefit focus, or venture fixates relying
upon the way of their operations and the level of obligation given to the section administration.
The central management gives the general bearing and procedure, however, a lot of choice making is designated to the section administration. It is
critical to effectively screen their execution, which is measured by management accounting tools, for example, residual income, accounting rate of
return, return on investment, and so on. By dissecting these measurements, the concentrated administration chooses whether to put in extra interest in a
fragment in light of its fabulous execution or to strip from a section when it is losing cash. These instruments are additionally valuable in looking at
execution of changed supervisors and in numerous organizations their compensation is connected to the ROI or leftover wage, they
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31. Activity Based Costing
Chapter 8
Activity–based costing
Problems with conventional product costing systems
General features of conventional product costing systems
Direct material and direct labour costs are traced to products
Manufacturing overhead costs are allocated to products using a predetermined overhead rate
Manufacturing overhead rate is calculated using some measure of production volume
Non–manufacturing costs are not assigned to products
Problems with conventional product costing systems
Failure to adapt to the changing business environment
Increasing levels of non–volume–driven manufacturing overhead costs
Increasing ... Show more content on Helpwriting.net ...
Depends on the purpose of the system, which depends on the needs of management
A decision to include activity–based management in an ABC system will influence the range of costs included in the system, as well as the type of cost
drivers identified
32. Activity–based hierarchy of costs and activities
Unit level activities
Performed for each batch of product
Batch level activities
Performed for each batch of product
Product level (or product–sustaining) activities
Performed for specific products or product families
Facility level (or facility–sustaining) activities
Not usually included in product costs
Activity–based versus conventional product costs
Conventional product costing assumes product costs are driven by volume–based cost drivers
Conventional costing ignores batch size
Units produced in large batches consume a relatively low consumption per unit of batch costs
ABC may include
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33. Products Costing System
Contents
Executive Summary................................................................................ Page 2
Introduction......................................................................................... Page 3
Analysis Part A – Conceptual Issues............................................................ Page 4
Analysis Part B – The Practical Application to Sunflower Ltd............................... Page 5
Reflective Learning.................................................................................... Page 6
Conclusion .......................................................................................... Page 7
References .......................................................................................... Page 8
Appendix............................................................................................ Page 9
Executive Summary
Dear Mr & Mrs Izsmart,
We acknowledge that Sunflower Ltd is a large public company, reputable for its diverse range of flowers and large customer base. At present, we have
identified that there is no formal product ... Show more content on Helpwriting.net ...
Generally, for long–term decision making such as determining which product lines to discontinue or promote and what price to set on these products
requires all costs in the value chain to be considered. When making short–term decision in relation to existing products, managers may only choose to
consider manufacturing and downstream costs as upstream costs have already been incurred. (refer to appendix)
34. Additionally, product costs may be used in assisting with planning and control. Managers may need to obtain reliable cost estimates for planning
purposes, as budgets are set. If costs vary and are frequently subject to change then decision making will not be effective. By comparing actual costs to
planned costs, current costs can be controlled.
Managers must assess the product profitability of a product so they are able to make optimal decisions about product mix and set appropriate prices.
The true cost to produce a product can be exposed and any possible reduction in the cost to produce this good can be identified. Additionally, non–value
adding activities may be identified and eliminated. This will prevent underpricing for a good where the company mistakenly believes profits are
possible when true costs and profitability are hidden under inadequate analysis.
However, when deciding to obtain additional information to facilitate managerial decision making, as always, costs and benefits of their use must
firstly be taken into account. The needs of
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35. Hampshire Company As A Tool For Measure The Business Activity
The Hampshire Company was evaluating on which cost system would best fit their needs as a tool to measure the business activity. When conducting
this process, Hampshire Company took a look at traditional cost method versus activity based costing. Traditional Cost method is defined as "The
traditional method of cost accounting refers to the allocation of manufacturing overhead costs to the products manufactured. The traditional method
(also known as the conventional method) assigns or allocates the factory 's indirect costs to the items manufactured on the basis of volume such as the
number of units produced, the direct labor hours, or the production machine hours. We will use machine hours in our discussion. By using only
machine hours to allocate the manufacturing overhead to products, it is implying that the machine hours are the underlying cause of the factory
overhead. Traditionally, that may have been reasonable or at least sufficient for the company 's external financial statements. However, in recent
decades the manufacturing overhead has been driven or caused by many other factors. For example, some customers are likely to demand additional
manufacturing operations for their diverse products. Other customers simply want great quantities of uniform products. If a manufacturer wants to
know the true cost to produce specific products for specific customers, the traditional method of cost accounting is inadequate." AccountingCoach.
(n.d.). "An advantage of using
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36. MGMT 20100 Practice Midterm Exam I
LAST NAME: _________________________ FIRST NAME___________________________
PUID________________________________Section________
Purdue University
Krannert School of Management
MGMT 201 – Managerial Accounting I
Spring 2015
Practice Midterm Exam
This practice exam consists of 30 multiple choice questions on 11 pages (including this cover page).
Answer all questions.
No partial credit is available for multiple choice questions. Be sure to put your answers to the multiple choice questions on your Scantron form.
The exam is closed book. A basic four function calculator is permitted.
GOOD LUCK.
Please circle the best answer and fill–in the corresponding circle on your Scantron sheet.
Only answers on the Scantron will be scored.
1. ... Show more content on Helpwriting.net ...
All of these figures include data that pertain to job no. J42.
What is the total cost assigned to J42?
a.
b.
c.
d.
11.
$17,100
37. $16,200
$15,900
$15,000
Many traditional costing systems:
a. trace manufacturing overhead to individual activities and require the development of numerous activity–costing rates.
b. write off manufacturing overhead as an expense of the current period.
c. combine widely varying elements of overhead into a single cost pool.
d. use a host of different cost drivers (e.g., number of production setups, inspection hours, orders processed) to improve the accuracy of product costing.
MGMT 201 Practice Midterm Exam–Page 4
12.
Consider the following statements regarding traditional costing systems:
I. Overhead costs are applied to products on the basis of volume–related measures.
II. All manufacturing costs are easily traceable to the goods produced.
III. Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production
requirements.
Which of the above statements is (are) false?
a. I only.
b. II only.
c. III only.
d. I and II.
13.
Saylor manufactures products X and Y, applying overhead on the basis of labor hours. X, a low–volume product, requires a variety of complex
manufacturing procedures. Y, on the other hand, is both a high–volume product and relatively simplistic in
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39. Response To Brittany Hill's Job & Process Costing System
In response to Brittany Hill's thread on Job & Process Costing Systems, I can easily say that she was very articulate in her passage. The thread is
well detailed and presented in a manner that is not confusing to the reader. To begin with, it is important that she starts out by highlighting the
differences between the two. For most people, costing systems can mean almost the same but as described by Cohen & Kaimenaki (2011), different
situations will allow specific systems to be utilized. This is exactly what Hill has been able to communicate. It was wise to talk about the two systems
separately, with each having its own paragraph. The importance of this is emphasized through the examples, which you also managed to bring out in a
clear and
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40. What Are The Strong Points Of Stewart Box Company's...
CRITICAL ISSUES
What are the strong points of Stewart Box company's current sytem?
Marketing
Stewart Box company differentiated itself from competition by focusing on custom–made orders and targeting a small niche market only. By doing this
they are able to actively cater to its customer's individual wishes, and strictly adhere to promised delivery dates.
What are the weak points of Stewart Box company's current sytem?
Marketing Reach
Stewart Box Company has a very limited customer base. They only market their products within a radius of about 500 miles from its factory, which
was located in a fairly small town. A limited customer base results to low volume of orders which will lead to the carton factory operating below its
capacity ... Show more content on Helpwriting.net ...
Therefore, it is very important for Stewart Box Company to be have slightly lower prices than its competitors to be competitive in a very cutthroat
industry.
RECOMMENDATIONS
Expand Market Reach
To address the underutilization of the carton factory, Stewart Box company needs to increase the volume of their orders. They can do this by going
beyond the their existing 500 mile marketing radius. They can also further increase their volume by catering to not only custom made orders but also
catering to standard packaging sizes. By increasing sales, the capacity of the carton factory is fully utilized, cost efficiency is improved, thereby
improving the bottom–line figures of the company.
Improve efficiency of factories
Stewart Box Company needs to address the Carton Factory operating under capacity. The underutilization of this plant may cause inefficiencies in the
41. company's operations thereby increasing its standard costs. This inefficiency in operations is evident in the unfavorable variances in the company's
Income Statement and Spending Report.
Reevaluate Costing Method
The company should reevaluate their costing process. Costing based on estimates of annual standard costs may be result to inaccurate cost estimates as
cost of raw materials and manufacturing equipment fluctuate within a year. The company needs to be more dynamic in their costing
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42. Office Dakota Products Case Analysis
Office Dakota Products Case Analysis Course: BUSA 5061 Managerial Accounting Students Name: Teresa Willette Professors Name: Dr. Conner/Dr.
Pollard Date 3/20/2011 Executive Summary The following analysis is written for Dakota Office Products to evaluate current business operations and
recommend future actions necessary to ensure company success. In the analysis of the company we will identify inefficient business practices that
have led to the companies first profit loss in its history. We will evaluate the companys current pricing structure, ordering methods, shipping and
delivery process, and deficiencies in cash flows. For Dakota Office Products (DOP), its existing costing system was inadequate because it is incapable
of accounting for... Show more content on Helpwriting.net ...
The key issue presented in front of the management is the possible steps to be taken by the management in order to avoid such losses. Critical
Thought The issue addressed by the accounting system of Dakota office products invites our attention to the premise of Activity Based costing
methodology. We are certain about the fact that the accounting and reporting system at Dakota Office Product is inappropriate and is leading to the
company making wrong decision ultimately leading to losses. This was apparent from the record where the company was able to increase its sales
without a corresponding increase in the profits for that particular year. Activity based costing system is an approach which seeks to allocate the overhead
cost to the products on a scientific and realistic basis. The existing system of allocating cost at Dakota Office products were inadequate in so much
so that it was following an unreasonable basis for allocating the cost, which were known and visible, such as the desktop delivery cost. The existing
system was suffering from oversight of some of the expenses. ABC costing system seeks to overcome the problem of oversight and make a more
reasonable allocation of the costs. The distinctive feature of this method is the fact that the method can provide useful insights to the management as to
the activities which are leading to the cost by
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43. Cost Accouting Systems for John Deere Component Works
Management Consultants
Report
Executive Summary
John Deere Component Works (JDCW) has been subject to a number of unsuccessful competitive bids due to the inherent deficiencies of their existing
costing system. This has illustrated the importance of obtaining a thorough understanding of costs, and desirability of implementing a superior costing
system.
This report contains: * A general overview of the problems confronted by JDCW * An analysis of the current standard costing system * An exposition
of Activity Based Costing (ABC) * An evaluation of the strengths and weaknesses of each system * Recommendations
Company Background
Deere & Company is an iconic American corporation, renowned for ... Show more content on Helpwriting.net ...
Following this revelation, management attention was directed to the current costing system.
Traditional Costing System
JDCW employed a traditional standard costing system throughout its operations. This form of costing permeated the industrial era, which was
categorised by low overhead costs and the production of a limited variety of goods. Standard costing involves allocating overheads to cost objects using
volume based cost drivers, such as machine or labour hours. Albeit easy to implement and understand, this system frequently results in over costing and
under costing. JDCW priced their products based on full costs, which included all direct material, labour, overhead and period overhead, using standard
costing. Whilst this practice was satisfactory for internal transactions, the inefficiencies were emphasised when JDCW sought to bid for parts against
external suppliers. Number of machine hours, direct labour hours and material dollars were used as overhead allocation rates. By restricting the
overhead rates to the aforementioned volume based activities, several problems eventuated.
44. The Industrial Engineering department used pre–established standard hours for direct labour runtime. Using standard hours produced costing
discrepancies, especially because no emphasis was placed on direct materials, overhead and period overhead costs. This was an insufficient method to
compare actual and standard percentages.
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45. Evaluation Of New Cost System Essay
MEMORANDUM
TO:CEO
FROM:CONTROLLER
SUBJECT:EVALUATION OF NEW COST SYSTEM
DATE:FEBRUARY 19, 2009
The purpose of this memo is to discuss and evaluate our traditional cost based system versus the new activity based or discrete product costing system.
I am going to highlight some of the positive aspects of the new system, discuss future scope and improvements along with some deeper analysis into
our unprofitable products and customers.
Over the years, many of our managers and higher officials have had trouble making business decisions due to the way our P&Ls were structured. We
faced several challenges when trying to negotiate with our customers because we were unable to show a cost break down which took into account every
aspect of the production process. Although, there are some advantages with the traditional costing approach, such as it aligns with general cost
accounting principles, ease of implementation in companies that provide a specific product, it had several drawbacks, such as:
Standard costing did not record sales deductions and individual customer costs.
There were arbitrary percentage markups through product allocation.
Equipment costs were included under factory overhead costs as percentage markup.
It did not reflect quality control, changeover and process engineering costs.
Only few variable costs were taken into account, while there were other costs like worker salaries, quality control and engineering costs which could
vary due to
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46. Activity Based Costing From The Perspective Of Competitive...
ACTIVITY BASED COSTING FROM THE PERSPECTIVE OF COMPETITIVE ADVANTAGE: A STUDY OF NIGERIAN MANUFACTURING
FIRMS
Anyadiegwu Peace Ebele1, Prof. Ifurueze Meshach S. 2
1, 2 Department of Accountancy Chukwuemeka Odumegwu Ojukwu University (COOU) Igbariam, Anambra State
Email: ebele_okpala@yahoo.com Phone: +2348038947784
ABSTRACT
The focus of this study was to examine activity based costing from the perspective of competitive advantage. ABC can support the strategic
management process and provide significant benefit to organizations. This examination utilized the contingency theory as a theoretical basis for the
study. Descriptive survey design was adopted. The data gathering instrument employed for this study is a structured questionnaire. Data are analyzed
through SPSS version 16. Reliability analysis using Cronbach's alpha value was applied on data collected. Factor analysis was employed using
principal component method followed by Varimax with Kaiser Normalization, to find the factors or dimensions that explain variances by the data set.
The factor analysis is based on four dimensions, namely, overall performance, strategic cost allocation method, increased efficiency and increased
effectiveness having the factor loadings of over В±0.3. The regression results are positive and significant at the 5% level. Findings reveal that there is
no statistically significant difference in cost reduction attained by ABC over Traditional costing, though ABC tended to have higher effect.
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47. Sample Resume : Managerial Accounting
MASTERS IN PROFESSIONAL ACCOUNTANCY STUDENT NAME:Shilpa Thakran
STUDENT ID:17909848
UNIT NUMBER:530
REPORT:
MANAGERIAL ACCOUNTING
TUTOR NAME:CHEOW WING WONG
DUE DATE :September 12, 2014
TABLE OF CONTENT INTRODUCTION...........................................................................................3
1.0 PRODUCT COSTING..................................................................................4
1.1 JUST IN TIME APPROACH.....................................................................................4
1.2JUST IN TIME APPROACH IS DISTINCT FROM PRODUCT COSTING....................4
1.3 USES OF PRODUCT COSTING..................................................................................5
1–4 IMPORTANCE OF... Show more content on Helpwriting.net ...
Product costing emphasizes on cost allocation which incurred at the time of manufacturing to the final product and Just in time approach involves
ordering of material as per need and have no inventories at the end. Traditional costing based on manufacturing and assumptions. Activity based costing
is time consumable and is suitable for both manufacturing and non–manufacturing businesses.
If companies reports are showing less profit for most efficient products and more profit for the product the company is not efficient in making then
there is a need to adopt product costing.
The report also covers how managerial accounting and financial accounting differ and why managerial accounting cannot be replaced by financial
accounting. These branches of accounting differ in various ways like managerial accounting is more future–oriented while financial accounting based
on past records. Also, managerial accounting is made for internal users like managers while financial accounting focus more on external users.
The purpose of the report is mainly to through light on various aspects of managerial accounting like the uses and purpose of managerial accounting
and how its different approaches helps in increasing profits and controlling costs and wastages that incur during production. The company in the given
48. issue is not following product costing due to which the company has little influence over the product price and in a competitive environment
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49. Cooperative Bank Case
Title of the Report:
Case Analysis of 'The Cooperative Bank'
The Purpose:
The purpose of the report is to submit the analysis of The Cooperative Bank based on the Activity Based Costing methodology
To whom it is submitted (Name of the instructor):
Prof. Sandhya Bhatia,
Professor, Managerial Accounting,
Indian Institute of Management, Udaipur
Name of the Author:
Abhishek Sengupta
Anubhav Nigam
Ravindran Damodaran
Saurabh Srivastava
Date of Submission:
24 February 2013
Organization/Institute's name (and logo):
Indian Institute of Management, Udaipur
TABLE OF CONTENTS
Situation ... Show more content on Helpwriting.net ...
2.Clear Debit Items ($1022140) – The process of clearing Debit Items can be majorly automated through Automated Clearing Houses (ACH). The
50. manual clearing facility may still be made available only on the basis of need and customer profitability.
3.Customer Inquiries ($850569) – This process/activity can be automated through Point of Sales (POS). The strategy can reduce the associated
overheads and at the same time improve customer experience.
VISA Accounts: The VISA account is the second highest revenue generating stream. The revenue is contributed by the three products viz. VISA
Classic, VISA Affinities and VISA Gold. Activitycosts account to 40 % ($3385954) of the product revenue. The target cost reduction activities in this
case are –
1.Process VISA Transactions ($917056)– These transaction activities can be automated through computer processing and this reduces the associated
overheads.
2.Marketing and Sales Activity ($453886) – These costs can be reduced by having cross–sales of Credit cards with the current Account customers
Personal Loans: The product gives the highest net profit among the range of available products. The Marketing and Sales Activity ($815211) and
Computer Processing activity ($113403) can be reduced by the deploying of strategies as for Visa Accounts and Current Account respectively.
CUSTOMER EXPERIENECE AND PROFITABILITY
The improvement in Customer Experience and Profitability was
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51. Process Costing
P E S Institute of Technology
Department of MBA
100 Feet Ring Road, BSK III Stage, Bangalore – 560 085
A TERM PAPER
On
Process Costing
Submitted in fulfillment of the requirements for the 3rd SEM MBA Management Accounting and Control Systems
Submitted to: Submitted by:
Prof. G V M Sharma Vandana Rajput Dept. of MBA1PB11MBA60
INTRODUCTION:
Process costing is a form of operations costing which is used where standardized homogeneous goods are produced. This costing method is used in
industries like chemicals, textiles, steel, rubber, sugar, shoes, petrol etc. Process costing is also used in the ... Show more content on Helpwriting.net ...
The cost of each process is thus made up to cost brought forward from the previous process and net cost of material, labour and overhead added in
that process after reducing the sales value of scrap. The net cost of the finished process is transferred to the finished goods account. The net cost is
divided by the number of units produced to determine the average cost per unit in that process.
Process Losses: In many process, some loss is inevitable. Certain production techniques are of such a nature that some loss is inherent to the
production. Wastages of material, evaporation of material is un avoidable in some process. But sometimes the Losses are also occurring due to
negligence of Labourer, poor quality raw material, poor technology etc. These are normally called as avoidable losses. Basically process losses are
classified into two categories
(a) Normal Loss (b) Abnormal Loss
1. Normal Loss:
Normal loss is an unavoidable loss which occurs due to the inherent nature of the materials and production process under normal conditions. It is
52. normally estimated on the basis of past experience of the industry. It may be in the form of normal wastage, normal scrap, normal spoilage, and
normal defectiveness. It may occur at any time of the process. No of units of normal loss: Input x Expected percentage of
Normal Loss.
The cost of normal loss is a process. If the normal loss units can be sold as
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53. Job Order and Process Costing Systems
1.| Question :| (TCO F) Assume there is no beginning work in process inventory and the ending work in process inventory is 100% complete with
respect to materials costs. The number of equivalent units with respect to materials costs under the weighted–average method is:| | | Student Answer:| x
| the same as the number of units put into production. | | | | less than the number of units put into production. | | | | the same as the number of units
completed. | | | | less than the number of units completed. | | Instructor Explanation:| Chapter 4| | | | Points Received:| 5 of 5 | | Comments:| Great job | | |
2.| Question :| (TCO F) Process costing would be appropriate for ... Show more content on Helpwriting.net ...
| Question :| (TCO F) The journal entry to record the incurrence of indirect labor costs is:| | | Student Answer:| | a Wages Payable| XXX| | |
Manufacturing Overhead| | XXX| | | | | | | | | b Work In Process| XXX| | | Wages Payable| | XXX| | | | | | | x| | c Manufacturing Overhead| XXX| | | Wages
Payable| | XXX| | | | | | | | | d Wages Payable| XXX| | | Work in Process| | XXX| | | | | | | Instructor Explanation:| Chapter 3| | | | Points Received:| 5 of 5
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54. Quantitative Techniques Used By Marketing Costing, Time...
Abstract– In today's competitive world, apart from a few isolated cases (e.g. luxury goods), the selling price of a product is predefined by the market
because customers are not willing to pay more than a certain amount of money for the product. Hence cost is one of the most influential factors in the
outcome of a product or service. Hence over the past years different costing techniques are evolved such as operation based approach, case based,
break down approach, feature based costing, Activity based costing, time–driven activity based costing etc. These techniques are classified based on
techniques with similar features. They are mainly classified into qualitative techniques and quantitative techniques. Qualitative cost estimation
techniques are based on a comparison analysis of a new product with the products that have been manufactured previously in order to identify the
similarities in the new one. Whereas the quantitative techniques are based on a detailed analysis of a product design, its features, and corresponding
manufacturing processes. Therefore quantitative techniques are more preferred. Time–driven activity based costing is a relatively new tool based on
quantitative technique.
This article provides a comprehensive literature review of Time–Driven Activity Based Costing (TDABC), which is used to improve the cost allocation
to products in manufacturing industry. This paper presents evolution of costing techniques and TDABC. It also gives detailed description
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55. Ac552 W3 Lecture Process Costing Quiz
Use the following information for questions 1––10. Top That manufactures baseball–style hats. Material is introduced at the beginning of the process in
the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the
pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of February 2005 follow: Work in process,
January 31–– 50,000 units 100% complete for direct materials, 40% completed for conversion costsactual costs of direct materials, $70,500; actual
costs of conversion, $34,050Units started during February, 225,000Units completed during February,200,000... Show more content on Helpwriting.net
...
$1.52$1.81
6. Assuming Top That uses the first–in, first–out (FIFO) method to account for inventories, the assignment of costs to units completed and transferred
to the Sewing Department during February is a. $658,350.b. $636,450.c. $666,000.d. $652,000.
The following additional data apply to questions 7––9. Standard costs for the Cutting Department: Direct materials – $1.50 per unit;
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56. The Deregulation Of Pre Privatised Governmental Industries
Since the 1980s businesses has bear witness to the dramatic changes within the manufacturing and service environment, due to the deregulation of
pre–privatised governmental industries. In retrospect, this caused companies to reassess their strategies to reflect the evolving competitive
environment. Immediately, companies were faced with the task of producing the same quality goods at a competitive global price. Globalisation, meant
that customers had the ability to shop around for competitive prices, meaning that companies had to base their whole business around customer
satisfaction. In order for business to survive they needed to adapt, meaning they had to find new techniques to keep cost low, whilst at the same time
remaining ... Show more content on Helpwriting.net ...
Initially, this could lead to management reducing direct labour hours, to reduce product costs. As a consequence, this could have dire effects on
efficiency and quality of products, as the only way to reduce labour overheads would be to either use less skilled labour or reduce the amount of
workers administering to the prod–uct.
Traditional costing (absorption) allocates all costs associated related to the manu–facturing process. These costs are then allocated using the overhead
absorption rate, which is calculated by dividing budgeted total activity by total budgeted activity. It should be noted that total budgeted activity depends
wholly on what method of allocation as company uses. Which you would usually find to be either labour hour or machine hours. In order to gain a
clear understanding of absorption costing, it is important to understand what an overhead are; since the method of allocation over–heads is what the
costing system is based upon. Overheads, also known as direct costs are expenditure which cannot be ''economically identified with a specific saleable
cost unit'. Furthermore, Overheads are important to management because they want a clear understanding of what caused costs to occur.
Traditional costing is based upon three main objectives. The first process allows, management to group costs by
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