system) cost of an order of one motor of type C (type C motors have 1 base motor and 3 special components)? For the traditional cost of an order of one motor of type C, we can solve it based on Exhibit 4. According to the Exhibit 4, we have that the cost of base motor is DM247, and the 3 special components would be 32.2*3=96.6. Thus, the total manufacture cost would be 343.6. On the other hand, in the case we can find that the support related overhead is equal to 35% of manufacture cost, thus the
Words: 419 - Pages: 2
Required: a. Describe the formula being used to calculate the cost per passenger mile flown. - The allocation of corporate costs is in form of transfer pricing within the firm. Since most cost allocation problems involve transfer pricing problems, in this problem, the formula being used consists of monthly expenditures for both fixed and variable costs divided by actual miles flown. b. As passenger miles flown increases, what happens to the cost per passenger mile? - The average price charged falls
Words: 411 - Pages: 2
point is when the profit is 0, meaning the incoming money pays exactly for fixed and variable costs. q=units V=variable costs p= selling price V=v*q v= variable costs per Unit F=fixed costs C=F+v*q (total costs) break-even point= Fp-v to reach a certain profit= F+profit to reachp-v turnover= p*q contribution margin=p-v in % (p-v)/p contribution margin is the total sales minus variable costs Safety margin expresses how much the turnover can decrease in order to be still over the
Words: 581 - Pages: 3
According to Fundamentals of Cost Accounting, “Activity-based costing (ABC) is a two-stage product costing method that assigns costs first to activities and then to the products based on each product’s use of activities”(Lanen, Anderson, Maher. 2011. P 319). While Traditional costing, is "often allocate costs based on single-volume measures such as direct-labor hours, direct- labor costs, or machine hours. While using a single volume measure as an overall cost driver seldom meets the cause-and-effect
Words: 418 - Pages: 2
consists of costs that cannot be practically traced to jobs. Therefore, if these costs are to be assigned to jobs, they must be allocated rather than traced. 3-2 The first step is to estimate the total amount of the allocation base (the denominator) that will be required for next period’s estimated level of production. The second step is to estimate the total fixed manufacturing overhead cost for the coming period and the variable manufacturing overhead cost per unit of the allocation base. The third
Words: 10936 - Pages: 44
1. Cost Breakdown Valves Pumps Flow Controllers Production 7500 12500 4000 Runs 1 5 10 Shipments 1 7 22 Material Costs Per Valve 16 20 22 Total Material Costs 120000 250000 88000 Labor Costs Setup/Run 8 8 12 Setup Costs @ $16/hr 128 640 1920 Runtime/Unit 0.25 0.5 0.4 Runtime Costs @ $16/hr 30000 100000 25600 Machine Costs Usage/Unit 0.5 0.5 0.2 Usage/Month 3750 6250 800 Usage Cost @ 25$/hr 93750 156250 20000 Overhead Receiving
Words: 486 - Pages: 2
Abstract There are two main cost allocation systems exist. Traditional cost allocation system allocates costs based on volume of production or proportionally to sales revenue. Such approach usually underestimates costs for low-volume products or services and over-estimates costs of high-volume products or services. To avoid such situations Activity Based Costing (ABC) system was developed. ABC system main principle is to identify main activities of the company, group costs of these activities, identify
Words: 3673 - Pages: 15
International Accounting Session 9 – Cost Allocations and Activity-Based Costing Dr. Othman Cole othman.cole@faculty.hult.edu 1 Absorption Costing In absorption costing, all manufacturing costs, both fixed and variable, are assigned to units of product. Units are said to fully absorb manufacturing costs. Most countries require some form of absorption costing for both external financial reports and for tax reports. Also, most companies across the world use absorption costing in their management
Words: 1598 - Pages: 7
COURSE TITLE: Cost Accounting COURSE NUMBER: EBA 213 PREREQUISITES: EBA 101, EBA 102 CREDIT HOURS: 3 DEVELOPER: Professor Simon Saltz LAST UPDATE: December 1,2003 COURSE DESCRIPTION: Cost accounting focuses on cost determination for manufacturers, products and services. This includes the establishment and maintenance of job order and process cost systems, and the classification of costs as product or
Words: 656 - Pages: 3
paired with the fact that there are high overhead costs related to the desktop delivery option, also tells the reader that an incorrect accounting system is currently being used. One needs only to look at the profitability difference between Customer A & B. Currently, there is no difference in the way that the size of orders are priced. In their current system, only the larger orders create a profit for the customer. ii. Develop an activity-based cost system for Dakota Office Products (DOP) based
Words: 776 - Pages: 4
