volume-based cost driver. assign overhead to products based on the products' relative usage of direct labor. often reveal products that were under- or over-costed by traditional costing systems. typically use fewer cost drivers than more traditional costing systems. have a tendency to distort product costs. 2. Burgoon uses an economic order quantity model and has determined an optimal order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and holding costs are $4
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SOLUTIONS: 2510 C ADMS 2510.3.0 Section C: Thursday 4-7: ACW 006: Mid-Term Exam #1 One hour allowed: there are three equally weighted questions: answer them all. Question 1: You are given the following list of cost and sales data for the Tiny Co for the year to 31st December 2013. Sales revenue: | $900,000 | Purchase of raw materials | $200,000 | Raw materials inventory at 1st January 2013 | $ 50,000 | Raw materials inventory at 31st December 2013 | $ 25,000 | Work-in-process
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unit-based drivers to assign costs. 2. Provide a detailed description of activity-based product costing. 3. Describe how homogeneous cost pools can be used to reduce the number of activity rates. 4. Describe activity-based system concepts including an ABC relational database and ABC software. chapter summary This chapter explains how activity-based costing systems produce more accurate product cost information than traditional costing systems that use unit-based drivers. Potential
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Malone turned to his controller, Melissa Dunhill and director of operations, Tim Cunningham for help. Malone wanted a clear picture of what it cost to process the orders and how can they improve their profitability? Dunhill and Cunningham met with Wilber Smith, the distribution center manager, to get a better understanding of the key issues and drivers. There are two ways MOP would process an order, manually or electronically. For manual orders, an order entry operator would enter the customer
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time, the high dollar value reduced U.S exports, which hurt the profitability of American farmers and therefore hurt their ability to purchase farm equipment. Management costs systems should be accurate and actionable. They should appropriately allocate the use of direct materials, direct labor, and all forms of indirect costs, or overhead, to the correct manufactured items. Divisions should also be created in order to give
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Delta Song Case Analysis Possible cost drivers that will allow us to estimate a salary cost function for Delta are: available seat miles, number of departures, available ton miles, revenue passenger miles, and revenue ton miles. The two cost drivers we chose were revenue passenger miles and available ton miles. The salaries consist of payments to pilots, flight attendants and ticket agents. Their salaries are determined by the number of passengers and cargoes and the miles or hours flown. This is
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This paper highlights the importance of Total Quality Management as it relates to business ethics, the value-chain, and regarding executional and structural cost in four scenarios. The four scenarios discuss HighTech’s COO ethical issues, Harley Davidson’s value-chain, Bikes.com executional cost drivers, and Food Fare’s structural cost drivers (Blocher, et al., 2013). All are techniques in which management creates policies and procedures that will guarantee that their products and services will exceed
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Burton Cummings graduated with honors from the Canadian Trucking Academy, his father gave him a $350,000 tractor-trailer rig. Recently, Burton was boasting to some fellow truckers that his revenues were typically $25,000 per month, while his operating costs (fuel, maintenance, and depreciation) amounted to only $18,000 per month. Tractor-trailer rigs identical to Burton’s rig rent for $15,000 per month. If Burton was driving trucks for one of the competing trucking firms, he would earn $5,000 per month
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of market share. -If strategy is to protect market share, air freight costs and inventory carrying costs erode profits and need to be reviewed. -The better approach is to expect some stock outs with the demand velocity and plan to maintain your supply chain with a cost effective approach. -Other teams in our group had more market share than us, yet we won the competition due to higher profits. Responsiveness comes with a costs. Spring 2013 Team 8 El Capitan of Cassia 2 El Capitan of
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strategic weaoon in the Quest for comoetitive oosition. By Peter B.B. Turney, Ph.D. This article exammes rne role of actiVity-based costing in the achievement of manufacturing excellence. It describes manufacturing excellence and the product cost information requirements of managers who seek to achieve it. It shows how conventional product costing fails to meet these needs, and demonstrates how activity-based costing corrects these deficiencies. It explains how managers in manufacturing companies
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