premium selling prices about 3% and 10% respectively in the order and the new line, particularly PURPLE, in fact, showed much higher margin over the others. The problem was addressed is that the production technology required for the RED and the PURPLE pens demand specifications. Especially, making the RED color needs more changeovers, which leads to waste lots of time on purchasing and scheduling and management activities as well as money. In order to come up with a management decision under this situation
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allocation rate to allocate indirect costs (typically based on direct-labor hours or machine hours), and therefore is simple and relatively inexpensive to implement. The activity-based costing approach uses multiple allocation rates using several different allocation bases (for example, machine setups, number of purchase orders, etc.), and therefore requires more accounting resources to implement. 3.8 Cultures that focus on long-term results are more likely to accept
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Study Plan for FNC1 Financial Accounting Concepts and Procedures Chapters 1-‐4 and Chapter 10 1. Understand Basic Accounting Concepts and Principles 2. Know what items are shown on a Balance Sheet, Income Statement, and Statement of Owners Equity 3. Know the Accounting equation 4. Understand debits and credits 5. Understand the timing of recording transactions 6. Understand when revenue and expenses are recoginized 7. Know how
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Job Costing: A Few Observations Understanding activities and processes is fundamental to modern management accounting. When you complete your study of material in this chapter, you should be able to: • . Take a factual situation and calculate a product's indirect cost. • . Discuss the shortcomings of the traditional approach and how products may be miscosted using such an approach. • . Take a factual situation and trace the flow of costs for a product using T-accounts; also, take the same situation
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Managerial Decision Making, Case 2, Greetings Inc. Activity Based Costing |Case 2 | | Greetings Inc.: Activity-Based Costing | |This case is from the book: Managerial Accounting: Tools for Business Decision | |Making, 5th Edition | |Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso | |©2010 | |And was answered by some students. | | | | | 1. Activity Based Costing benefits businesses that are more complex in nature. In this case, Greetings. INC has added a new product
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& Income Statement WIP Balance Finished: A3+A4+A6=Finished $3,805+$4,175+$1,110=$9,090 Work In Process: A5+A7=WIP $2,380+$1,145=$3,525 The WIP balance for Job A-5 is $2,380 and the WIP balance for Job A-7 is $1,145. Together, they create a balance of $3,525. a.) I would not have taken the order from Mrs. Carter at the price of $1,500. b.) If Lambeth would have taken the offer, they would have lost a profit of at least $125. Mrs. Carter was willing to pay no more than
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Costing System Analysis It can be easily assumed that from the unique and costly nature of producing airplanes Boeing employs a job-costing system, however that is not the case. Long gone are the days when Boeing’s “primary business was producing military aircraft” (Bowlby 1994) as they now have transitioned to focusing on mass producing numerous parts and assemblies for aircrafts across the globe. In an article published on November 1, 1994 titled, “How Boeing tracks costs, A to Z.”, Robert J
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input-output relationship are commonly called A. Committed costs. B. Discretionary costs. C. Opportunity costs. D. Differential costs. [Fact Pattern #1] The estimated unit costs for a company using absorption (full) costing and planning to produce and sell at a level of 12,000 units per month are as follows. Estimated Cost Item Unit Cost --------- --------- Direct materials
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Review Questions: Chapter 4 - Job Costing True/False 1. The computation of the budgeted indirect manufacturing cost rate is identical to the budgeted indirect cost rate for service organizations. 2. Similar jobs can be recorded on the same job cost record in the job costing system. 3. The consumption of direct materials, direct manufacturing labor, and allocated manufacturing overhead are credited against work-in -process for the applicable period. 4. Indirect materials, indirect manufacturing labor
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1 of 10 OFFICE USE ONLY ACW2020 COST INFORMATION FOR DECISION MAKING Question 1 (20 marks) (a) Describe the inventory accounts that are used to keep track of the cost flows in a manufacturing firm. (b) What is activity-based costing, and
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