Running head: COSTING AND PRICING DECISIONS Costing and Pricing Decisions Cost Allocations Cost allocation is the process of assigning the indirect costs of producing a product. These indirect costs may be shared by multiple products. This is where cost allocation comes into play. Indirect costs can be allocated to products, services and departments. Cost allocation allows a company to calculate fully cost of their products. This provides them the ability to price products accurately.
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not shown a profit. Based on the interviews and data provided in the case, estimates will show the costs of processing cartons through the facility, entering electronic and manual customer orders, shipping cartons on commercial carriers, and the cost per hour for desktop deliveries. There will be calculated data for the cost and profitability of five exhibited orders, with a comparison of the costs and profitability to those calculated by Midwest’s existing costing system. The analysis provides
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object. F____ 6. In an actual cost system, actual production overhead costs are typically accumulated in an Overhead Control account and assigned to Work in Process at the end of the period. __T__ 7. In an actual cost system, factory overhead is applied to Work in Process using a predetermined overhead rate. _F___ 8. In an actual cost system, overhead is assigned to Work in Process Inventory with a credit entry to the account. T 9. Variable costing is commonly used for internal reporting
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* 2 Scope, practice, and application * 3 Differences between financial accountancy and management accounting * 4 Traditional vs. innovative practices * 5 Role within a corporation * 6 Specific methodologies * 6.1 Activity-based costing (ABC) * 6.2 Grenzplankostenrechnung (GPK) * 6.3 Lean accounting (accounting for lean enterprise) * 6.4 Resource consumption accounting (RCA) * 6.5 Throughput accounting * 6.6 Transfer pricing * 7 Resources
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done based on information provided in the case, regarding pricing decisions, decision to discontinue or continue a product and product design. A detailed analysis of the problems faced by Wilkerson Company is as follows. Analysis Based on the operating results of March 2000, we see that the company has grouped its overheads into 5 cost items, as below: Machine-related expenses Setup labor cost Receiving and production control Engineering Packaging and shipment Current Method - Volume Based Costing
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Purple pens require more set up time ¨ A lot of time spent on scheduling and purchasing activities 4. Costing system of Classic Pen ¨ All indirect costs were aggregated at plant level and allocated to products based upon the direct labor cost ¨ The overhead rate is 300% of direct labor cost ¨ Before Red and Purple pens were introduced, the overhead rate was only 200% of direct labor cost 5. Traditional Costing Method Traditional Income statement Blue Black Red Sales Material costs Direct labour Overhead
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ASSIGNMENT ON COSTING Submitted By, MOHAMMED NAFAISE QUESTIONS 1. Define the term cost. Explain various types with relevant examples? 2. Methods and techniques of with relevant industrial examples? COST The cost is defined as the amount which is paid or given up to get something or to achieve the objective of the business. In business the objective may be to make a product, to provide a particular service and so on. Cost is
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successful businesses do to capitalize on and expand their profits? Many things contribute to successful business enterprises, but the bedrock principle of every successful business venture is honest accounting practices. Accounting is the information system which assesses an organization’s undertakings, computes the figures into reports, and imparts the outcome to an influencer. Accounting is a general, all-encompassing term that can mean many things to many people, so there are a few sub-categories
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Financial Analysis A1. Costing Method The purpose of the following Executive Summary is to illustrate Competition Bikes Inc.’s need to alter our current costing method by utilizing the activity based costing (ABC) method. Traditional based costing (TBC) is a method a company may use to find the cost of a product in relation to the revenue it creates. It is used to designate manufacturing overhead to units made (Chron, 2013). Activity-based costing identifies activities that a company executes,
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Exchange with the stock symbol NKE. Today, Nike employs over 38,000 people across the globe, and has net revenue in excess of $21 billion (Nike, Inc., 2011). Nike is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products. Nike must therefore respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and categories, and influencing
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