Explain how costs are estimated in the three cost systems delineated in the case: (a) The traditional cost system, (b) the modified cost system, and (c) the activity based costing (ABC) system. How do you determine which cost system is better suited for a given company? The traditional cost accounting system in Destin is built on measurements of direct and direct costs and on assumptions about its production and sales activity. Each unit of product is charged for material cost and labor cost; material
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Enhanced, and applies overhead on the basis of direct-labor hours. Anticipated overhead and direct-labor time for the upcoming accounting period is $800,000 and 25,000 hours, respectively. Information about the company's products follows. Standard: Enhanced: Estimated production volume 3,000 units 4,000 units Direct-material cost $25 per unit $40 per unit Direct labor per unit 3 hours at $12 per hour 4 hours at $12 per hour Ontario's overhead of
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caused the existing system at ETO to fail? The primary reason for the failure of Electronic Testing Operations’ (ETO) existing cost accounting system is ETO’s reliance on a labour-based overhead allocation system, which relied on an arbitrary cost-driver (i.e. overhead rate based on total pooled overhead costs and direct labour costs) (Turney, 1988, p. 2-3). The cost driver is based entirely on direct labour and assumes that all the components utilise direct labour and overheads in an equal proportion
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30, 2005? 13 Analysis 14 Q4) why is it important that Superior has an effective cost system? 17 What is your overall appraisal of the company’s cost system and its use in report to management 18 List the strengths and weaknesses of the system and its related reports for the purpose management uses the system’s output 18 What recommendations, if any, would you make to waters regarding the company’s cost accounting system and its related reports? 19 Initial Analysis of Superior Manufacturing
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Management Accounting Names Institutional Affiliation Introduction Most businesses have a number of objectives set in order to achieve the goals and maintain their policies. Some of the objectives include customers’ satisfaction with goods and services of high quality, high level of market penetration, free and attractive environment, and successful performance in terms of profit (Kouvelis, 2012). The success of the firm in terms of the sales depends on the strategies laid to balance cost of production
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valves, connectors, and fixtures used in commercial and residential plumbing applications. Recently a senior manager walked into the cost accounting department and asked Nick Somner to tell her the cost of the D45 valve. Nick quickly replied, “why do you want to know?” Noticing that the manager appeared somewhat startled by this question, he explained, “The cost information you need depends on the decision you’re going to make. You might be thinking of increasing a scheduled production run of
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valves, connectors, and fixtures used in commercial and residential plumbing applications. Recently a senior manager walked into the cost accounting department and asked Nick Somner to tell her the cost of the D45 valve. Nick quickly replied, “why do you want to know?” Noticing that the manager appeared somewhat startled by this question, he explained, “The cost information you need depends on the decision you’re going to make. You might be thinking of increasing a scheduled production run of 3000
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SQUARE TEXTILES LIMITED Definition of related terms: Cost accounting: Cost accounting involves recording of cost accumulation of cost analyzing of cost and control of cost. Material Control: The term Material Control means recognition of function of an organization relating to the procurement, storage and wages of material in such a way as to maintain and even flow of production without excessive investment in material struck. Material can be classified into two categories: 1. Direct
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individual activities as fundamental cost objects. “The development of an ABC costing methodology could typically be analyzed with focus on the following phases: 1. The determination of the significant operational activities. 2. The identification and collection of costs specific to each of these activities. 3. The identification of the cost drivers for each of these activities. 4. The determination of the activity unit costs. 5. The allocation of the costs to the cost objects based on the activity
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Assignment 2 Course Code: MGT 431 Course Name: Managerial Accounting Due Date:15th November, 2015 General Guidelines SUBMISSION OF ASSIGNMENTS i. Clearly indicate your NAME, ROLL NUMBER and COURSE MODERATOR NAME (i.e.AmeenaArshad) on the final document. ii. This is an activity based assignment DO NOT Cut, Copy, Paste lengthy theory. iii. The due date for assignment is 15th November, 2015 SUNDAY. Unless advised otherwise by the course moderator, all work is to be submitted
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