Cost Allocation ACC/561 April 23, 2012 Cost Allocation The purpose of cost allocation is to identify and correctly allocate costs associated with a job, product, or service. The main uses of cost allocation are to facilitate decision-making regarding costs, justify prices charged for products and services, cost control, and for optimal utilization of resources. There are several methods used for cost allocation, depending on the type of product or service offer by the company. Variable
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has activities as the fundamental cost objects and assumes that activities cause costs and that cost objects create demands for the activities. A traditional costing system uses a single, volume based cost driver. In most cases the traditional system assigned the overhead cost to products on the basis of their usage of direct labor. For this reason traditional cost systems often yields inaccurate product costs and becomes inadequate in terms of calculating true cost to produce specific products for
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CASE BETA COMPANY SYNOPSIS Beta Company produces two Product A and B and standard costs of each product were predetermined by management. During November actual production for Product A was 4,200 units while Product B was 3,600 units. For material X, 39,000 pounds were purchased at $14.40 and for material Y, 11,000 pounds were purchased at $9.70. Variance analysis for actual cost versus standard cost should be prepared for the said month to be able to measure results of operations, which may
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1. Question : (TCO A) Managerial accounting provides all of the following EXCEPT _____. Student Answer: future-oriented information a balance sheet prepared in accordance with GAAP internal reports that don't follow GAAP financial and nonfinancial reports on departments Instructor Explanation: Chapter 1, page 4 Points Received: 6 of 6 Comments: 2. Question : (TCO A) Borders Books is an example of a Student Answer: manufacturing-sector
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Managerial accounting is different from cost accounting in that it takes into account more than the cost of the perpetual inventory system; it also has to make decisions based on the needs of the whole company. Cost accounting deals with the process of tracking recording and analyzing costs that are associated with a company’s product or project. As an internal manager, they are the ones that normally use the cost accounting information. Direct costs, indirect costs and overhead costs are what
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5. Managerial Accounting 6. Managerial accounting 7. Financial Accounting 8. Feedback 9. Controller 10. Performance report E2-2 1. The cost of a hard-drive installed in a computer: direct materials cost. 2. The cost of advertising in the Puget Sound Computer User newspaper: marketing and selling cost. 3. The wages of employees who assemble computers from components: direct labor cost. 4. Sales commissions paid to the company’s salespeople: marketing and selling cost. 5. The wages
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CHAPTER 4 ACTIVITY-BASED COSTING CHAPTER REVIEW UNIT COSTS 1. Functional-based and activity-based costing assigns costs to cost objects such as products and customers. Once costs are assigned to the cost object, the unit cost is calculated by dividing the total cost assigned to the units produced by the number of units produced. 2. Unit cost information is used to: ■ value inventory ■ determine cost of goods sold, which affects income ■ determine bids to give to potential
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Learning Team C Week 3 Case Study BYP 4-2 ACC349 April 4, 2011 Learning Team C Week 3 Case Study BYP 4-2 [pic] [pic] (a) |Activity cost pool |Estimated overhead |Cost drivers per activity |Total cost driver activity |Activity-based overhead rate | |Market analysis |$1,050,000 |Hours of analysis |15,000 hrs |$1,050,000 =$70 | | | |
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and/or hire/replace some employees for assistance with the consumers complaints. B. 6 types of cost Management Cost- Cost management is the process by which companies control and plan the costs of doing business. This can be translated as reducing costs of production for products or services, in addition to improving value being delivered to the customer. Manufacturing cost - Manufacturing costs flow through three basic responsibility centers: the raw materials storeroom, the factory, and the
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plants and three construction sites. The company has to figure out a way to satisfy the demands of the three construction sites using the cement it produces and transport the cement from its plants to the construction sites at the minimum transportation cost possible. The solution to the transportation problem was arrived at by solving the problem using the ‘Solver’ tool in Microsoft Excel. I would like to thanks Dr. Hitesh Arora for guiding me through with the course curriculum of Decision Making
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