1. ABC revised product costs for 4 pens: Indirect labor (3 activities) ($20,000) a. .50 scheduling/ handling production runs= b. .40 physical changeover= c. .10 maintain records on 4 products Operate. Computer systems: ($10,000) a. .80 included in production run activity b. .20 keep records on 4 products Machines ($14000) a. Machine depreciation b. Machine maintenance c. Energy to operate machines Direct labor= 20,000+8000 (fringe benefits) = 28000 Indirect labor= 20,000+8000 (fringe)
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effective for the CB. Competition Bikes is using a traditional based costing (TBC). There needs to be a comparison between the current use of TBC and activity based costing (ABC) to decide which is most beneficial to the company. Also, the breakeven point to cost volume profit needs to be evaluated. There is a potential for a $50,000 increase in production and a 10% material cost increase. A1 Costing Method Traditional Based Costing is, “The allocation of manufacturing overhead (indirect manufacturing
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Journal of Business & Industrial Marketing Emerald Article: Activity-based costing: a powerful tool for pricing John C. Lere Article information: To cite this document: John C. Lere, (2000),"Activity-based costing: a powerful tool for pricing", Journal of Business & Industrial Marketing, Vol. 15 Iss: 1 pp. 23 - 33 Permanent link to this document: http://dx.doi.org/10.1108/08858620010311539 Downloaded on: 05-04-2012 References: This document contains references to 4 other documents To copy
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6.Activity based costing/Target costing Mechanism for determining selling prices. It is a cost management tool. TATA tries to manufacture a car at Rs. 1 ,00,000. – is a typical example for target costing. 42. Stages of target costing 1. Determine the target price which customers will be prepared to pay for the product 2.Deduct a target profit margin fro the target price to determine the target cost 3. Estimate the actual cost of the product 4.If estimated actual cost exceeds the target cost
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Descriptions of activity-based-costing (ABC) systems have become a standard part of managerial accounting texts. While ABC implementation issues are the focus of a number of articles, these issues are often not addressed in a typical textbook. This case is designed to familiarize you with the behavioral and technical variables that can aid or impede successful ABC implementation. Anderson's (1995) factor-stage model provides a template to organize the discussion of ABC success factors. In this case
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ACTIVITY-BASED COSTING An organisation so as to be to comply with financial reporting requirements, the traditional cost accounting system is closely linked to its general ledger system. This in particular has to do with cost allocation. Mostly, costs are accounted either for valuation (i.e., financial statements analysis) or decision-making activities (i.e., internal purpose) or both. Meanwhile, sometimes the costs are accounted for reimbursement purposes (e.g., corporate health insurance, corporate
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AC556 Week 1 Problem ABC Costing NOTE: It is expected that this problem will be completed using an Excel spreadsheet using formulas. Please see the Excel Tutorial that is available under the course home tab. The new president of the Wernecke Company was stumped. Why had profits gone down? He had directed the sales department to push the product with the highest contribution margin, and the sales department had come through with flying colors. The percent of flams sold had increased from 25%
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industry wise price cuts in the pump business, which is Wilkerson’s major product line, has badly affected the company’s margins (Gross margin below 20% as against a planned gross margin of 35%). The firm has identified the need to investigate its costing mechanisms and determine their credibility comparable to those exercised elsewhere in the market. The need of the hour for Wilkerson is to identify the proper mix of its product line to regain its profitability. Wilkerson is a quality leader, but
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Costing System 1. Costing System 1.1 Illustrate the costing system currently used by Devon Quality in Cost Centre 3 The costing system currently used by Devon Quality Dairy in the Cost Centre 3 is a traditional costing system this is because in this case study Devon Quality Dairy are allocating there expenses to products using volume based drivers. In this case study, the resources consumed by Devon’s Cost Centre 3 are depreciation, labour, utilities and other, which are all of the costs
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01, 2016 Table of Content I. PROBLEM IDENTIFICATION ……………..……… 3 II. ANALYSIS ………………………………………..….... 3 1. Overhead Assignment ………………………….…… 4 2. Activity-based Costing System ……………..…….… 5 a. Appendix ……………………………….……...... 5 b. ABC and Actual Production Volume ………….…... 5 c. ABC and Capacity Production Volume ……….….... 5 3. Expand and Analysis …………………………..…… 5 III. ALTERNATIVES AND EVALUATION …….……. 6 IV. RECOMMENDATION …………………………..…… 6 I
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