Costing Methods ACC/561 March 12, 2012 Monique Smalling Super Bakery Super Bakery is a virtual company that handles only core functions of the business while all other aspects are outsourced. Even though the bakery became a leader in the institutional baked goods market the company had reoccurring issues containing costs and ensuring the quality of their products. The management team at Super Bakery decided to implement and activity based costing plan to help maximize profits
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Introduction Businesses – from manufacturing, merchandising and service industries alike – take careful considerations for their costing systems. Setting-up competitive prices in the market can be a result of proper costing methods. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods Zauner Ornaments are currently using and upon conclusion, it will
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1 We recommend Cumberland Metal Industries capitalize on their evolving position as a leader in the curled metal industry and effectively launch their new curled metal cushion pads to be positioned as the “new industry standard” in the pile driving market. In order to successfully launch this product, we first and foremost recommend that CMI acquire a patent to prevent this product from being copied and imitated, thus avoiding the entry of competitors. The associated value and advantages of CMI’s
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Lewis v. D. Hays Trucking, Inc. This case revolves around the liability of principals, agents, and independent contractors. The question is whether D. Hays Trucking Inc. is an employee of Hercules Inc. or is D. Hays Trucking Inc. an independent contractor? Once that question is answered, the court case becomes very clear of who is responsible for the damages caused by an accident. Here is the facts and background of the case. Hercules Inc. is large chemical corporation that has operations
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ABC is to identify the cost drivers associated with each activity. These cost drivers can be selected based on causal relation, benefits received, or reasonableness. 3.4 Companies using a single plantwide rate for their allocation of indirect costs usually select a volume based allocation factor, such as direct labor hours, machine hours, volume of activity, or material costs. 3.5 1. Identify the activities that consume resources. 2. Identify the cost drivers of those activities. 3.
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Activity-based costing (ABC) is a costing method that first assigns cost to activities and then assigns them to products based on the products’ consumption of activities (Lanen, Anderson, & Maher, 2011). Activities are tasks that are required in order for a company to finish its product. ABC was first written about by Alexander Hamilton Church in 1901. He believed that overhead was the cost of different activities of production. He believed that in order to report accurate costs, all of the cost
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When 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
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Case 4: Dakota Office Products Summary The general manager of Dakota Office Products (DOP), John Malone was concerned about the financial results for the fiscal year 2000. The company had suffered a historic first loss in spite of sales increase from its prior year as noted in the income statement in (Exhibit 1). DOP distributes office supplies and offers a comprehensive product line. DOP had an excellent reputation for customer service and response time. It had operated
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GAS SERVICE DELIVERY We are providing durable, reliable and affordable to users of gas. Our service delivery would want to make gas readily available to these users for domestic, transport (like some taxi drivers) and commercial activities. This service creates an environment for taxi drivers to switch to gas instead of relying on petrol, hence, bringing change to the transport system. Product concept Concept A We provide the fastest –gas delivery service to your door step. You make the call
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5-7 The Buckeye National Bank (Activity-Based Costing in the Service Sector) ABSTRACT: The U.S. Bureau of the Census projects that by 2006, the service sector will employ 74 percent of the workforce. This case illustrates why a major segment of the service sector—banks—needs accurate cost information to make strategic decisions, and how more refined accounting systems help fulfill this need. Buckeye National Bank is a hypothetical bank that has suffered falling profits despite a shift in
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