Executive Summary De Havilland (Havilland) is Canadian aircraft manufacturer that was recently acquired by Boeing. The parent company has requested Havilland take on several initiatives including seeking 25% price reductions from suppliers, reducing the total number of suppliers and seeking more long-term fixed pricing agreements. Havilland recently received submissions for an RFQ for the supply of supply flap shrouds and equipment bay doors. The pricing received raises some concerns however,
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Objective 1: Describe the building-block concepts of costing systems. 1. LO 4-1 overview: The building-block concepts of a costing system are cost object, direct costs of a cost object, indirect costs of a cost object, cost pool, and cost allocation base. Costing systems should report cost numbers that reflect the way chosen cost objects, such as products or services, use the resources of the organization. 2. Study pages 98-100. 3. LO 4-1 lecture slides
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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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Contingency Pricing: Problem (TCO G) Crashing: Problem (TCO C) WBS: Problem (TCO E) Resource Allocation/Leveling: Problem (TCO F, G) Earned Value/PMIS: Problem (TCO C) General Budget development, sensitivity: Problem Discussion topics: (TCO D) Accounting, PMIS, and Project Control (TCO A) Budgeting processes and techniques (TCO E) Resource Allocation Matrix (TCO F) Project Control Process (TCO F, G) EVM and EAC: Discussion: Terminal Course Objectives
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Chapter 6 homework a.Allocation base should be such that it drives the cost of the service department Service Department Allocation base Human Resources (hires employees and manages benefits) Number of employees Duplicating (performs copy services) Number of copies made Janitorial (provides routine cleaning services) Floor Space Accounting (provides accounting services) Number of transactions Graphic Design (designs forms) Hours required in designing
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relationship of activity inputs to outputs. To improve activity efficiency is to produce the exact activity output with lower cost for the inputs used. Cost and trend then becomes important to measures of efficiency. Quality main concern is doing things correctly the first time it is done. If activity is defective, activity will have to be repeated which causes unnecessary cost and reduction in efficiency. Time required performing an activity which is critical. Longer times means, more intake of
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depreciated already → well above-average gross margins • Reader/loader units from Japan that were put through a lot of quality control → higher cost and below-average margins (8) • Based on the arithmetic calculation, the overhead rate would decrease; overhead, the numerator, would remain the same, while being spread over a larger denominator, the allocation base quantity 2. What are the causes of excess capacity at ANAGENE? How is this situation different from the causes of excess capacity at BRIDGETON
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1. Executive Summary This report covers on the central problem the business encounters and offer solutions to reconstruct certain facets of the business. The main concern that Cambden Cakes faced is the inaccuracy of the method of costing used which results in a misstatement in its profit report. This report is to offer an alternative to the current costing method - Activity-Based Costing (ABC). The following detailed explanatory will be covered in the main body Limitations
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introduction of variable costing for monthly management reports. | Marketing will underprice products if only the variable cast per unit is emphasized. | It eliminates time-consuming and argumentative fixed overhead allocations. | Lack of control over long-run costs can bankrupt a company. | Cost control will be improved. | Lower profits will be worrisome to shareholders and hankers. | Contribution margin data are better signals of product profitability than arc gross margin data | | Landau Company’s
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Introduction Costs fall into two categories: direct and indirect. Direct costs are those costs which can be attributed to a specific final cost objective(s); alternatively, indirect costs are those costs which have no specific cost objective. An example of a direct cost might be the costs associated with salaries of "hands-on" personnel, e.g., engineers supporting a particular project. An indirect cost might be the office supplies those engineers use, the cost of rent on a facility in which
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