Acc550 milestone 3

Activity Based Costing Give your answers to the following questions;  Why do product costing systems based on a single, volume based cost driver tend to overcost high volume products? What undesirable strategic effects can such distortion of product costs have?  What is meant by activity analysis? Give 3 criteria for determining whether an activity adds value.  What is meant by customer profitability analysis as it relates to activity based costing? Give an example of an activity that might be performed more commonly for one customer than another.

Notes: ************************* Activity-Based Costing: A Comprehensive Analysis and Application Activity-Based Costing (ABC) is a widely used costing methodology in modern business management. It provides a more accurate and detailed approach to allocating costs to products, services, or projects, compared to traditional costing methods. ABC assigns costs based on the activities and resources consumed, making it an essential tool for organizations to understand their cost structure and make informed decisions. This research assignment aims to delve into the concept of Activity-Based Costing, its benefits, challenges, and application in real-world scenarios. Key Components of Activity-Based Costing Required:********************* Describe the process of conducting an activity analysis. d) Show how activity analysis helps in identifying cost drivers. %^#×++×/_>>[](***?,,;:::"%'xddfghhhgghf:^$$$

Which of the following statements is true of activity-based costing? O a. Activities are the cost objects of the second stage of ABC. O b. ABC ignores the allocation of storage costs. O c. ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. O d. An activity cost pool collects costs related to the same activity. DUS PAGE NEXT PAGE e here to search 11:38 O a dx ENG 22-05-2021 hp రు 144 ort sc delete end home 4 7\ - backspace num lock E 8. home F K enter pause M ↑ shift end alt ctrl

[4] Product costing provides useful decision-making information in relation to all of the following alternatives, but one. Which one? a) Non-manufacturing firms bị Management planning, cost control, and performance evaluation c) Financial reporting dj Developing awareness about the company environmental impacts [5] The main distinction between job costing and process costing is: a) The difference in the level of detail required by each system b) The use made of the costing information c) An accounting difference dj The cost object on which costs are accumulated [6] In its first month of operations, Margherita Ltd produced 100,000 units. 90,000 units were sold. The manufacturing cost per unit was as follows: Direct materials cost Direct labour cost Variable fixed overhead cost Fixed overhead cost Total per unit cost £40 £20 £30 £50 £140 Margherita Ltd's operating income under absorption costing is: a) Lower than variable costing by £500,000 b) Higher than variable costing by £600,000 c)…

Question 2 A. B. C. How does Activity-Based Costing differ from traditional costing? Identify any TWO (2) advantages and any TWO (2) limitations of Activity-Based Costing. (4 marks) McNish Enterprise manufactures and sells two products, Standard and Premium. The company uses the activity-based costing system to allocate its overhead costs. The following information has been collected relating to the SIX (6) overhead activities: Activity Purchase Orders Quality Control Material Handling Setup Cost Cost $ 400 500 $ 275 000 $ 150 000 $ 50 000 $ 125 000 $ 240 000 $1240 500 The activity-based usage quantities for each product are as follows: Production Scheduling Procurement Number of Setups Orders 900 1 600 (2 marks) Number of Inspection 500 500 Number of Orders Executed Standard 300 750 Premium 200 1 250 Total 500 2.500 2 000 1 000 The company produces 5 000 units of Standard and 4 000 units of Premium calculated in (i.) above. iii. Calculate the unit cost for each product. Required: i.…

Why would a business that uses traditional costing systems consider implementing activity-based costing? Discuss the following in your answer: Problems with traditional costing systems in a modern manufacturing environment. Whether the benefits of activity-based costing always outweigh the costs.

company You are a management accountant of EON and Brothers Ltd., a manufacturing that produces two products simultaneously in one of their production plants. You are asked to produce a management report on costing techniques. This company follows a traditional approach to costing and absorbs production overhead using machine hours. The company's policy is to add a 50% markup on the unit cost to obtain the selling price. The relevant information is given below: EON and Brothers Ltd. produces two similar products called Alfa and Beta. Total Overheads = £155,000 Machine Hours = 58980 hrs Product Alfa Beta Production Units 2,580 5,100 Material Cost per unit £31 £51 Labour Cost per unit £21 £17 Machine Hours per unit 11 16 After discussing with all the important people of the production plant you have allocated the overhead costs as mentioned below: % Overheads Set up Costs 30 Inspections 40 Materials Handling 30 Cost Pools are as mentioned below: Alfa Beta Total Setups 400 65 465…

You have been asked by management to classify the costs associated with the start-up of this new product line. Using the cost information provided below, classify each cost under the appropriate heading according to the chart provided below. Note that some costs may be classified under more than one heading. For example, a cost may be a fixed cost and a period cost. Name of cost Variable Cost Fixed Cost Direct Materials Direct Labor Factory Overhead Period Cost Prime Cost Conversion Cost Carlson “New Product” Cost Information Cost Amount Cost Type Depreciation on Building (annual) $ 10,000   Direct Labor Cost (per unit) $ 75   Direct Materials Cost (per unit) $ 60   Factory Utilities (per unit) $ 8   Indirect Materials (per unit) $ 4   Interest on Investments (annual) $3,000   Machinery Rental (monthly) $ 6,000   Marketing (annual) $ 35,000   Rent from Tenant (annual) $40,000…

Part AChoose ONE of the costing systems studied in this unit from the list below, and answer thequestions that follow:• Job Costing• Process Costing• Operation Costing (Hybrid Costing)• Activity-based Costing (ABC)Questions:1. Briefly discuss the features of your chosen costing system. 2. Identify 2 specific Australian companies that your chosen costing system is suitable for, and explain why.3. Discuss two potential uses of the cost information for decision-making, to the managers in each of the 2organisations selected in Q2 above. Part BChoose one peer reviewed journal article (from any country) on the: Use of your chosen costing system in areal-life organisation (i.e. a case-based empirical study). The article should be published between 2005 –2020. Choose your article only after you have accessed and reviewed several relevant articles, and thenchoose the best article that will answer the questions below.Questions:1. Based on your chosen costing article, briefly summarise how the…

Please answer with reason for all why the option is correct and why the other options are incorrectPlease answer correct otherwise skip it   4. Which of the following statements is true? An activity measure in activity-based costing expresses how much of an activity is carried out and it is used as the allocation base for assigning overhead costs to products and services. Activity-based management involves focusing on activities to eliminate waste, decrease processing time, and reduce defects. An activity-based costing system is generally more difficult to set up and run than a traditional cost system.   Multiple Choice Statements I and II are true. Statements II and III are true. All of the statements are true. None of the statements are true.

Instructions: Read and analyze the scenario below. Write your answers on the spaces provided. In the Interesting box, write down how each costing method would contribute in achieving the main objective of Expedia Industries. In the My Decision box, write down your Recta recommendation about the most effective costing approach that will resolve the problem in the given scenario using one (1) between the two (2) costing methods being compared. Scenario: Expedia Industries Expedia Industries is the largest supplier and manufacturer of modern women's clothing in the United States. The main objective of the company is to establish a costing procedure that will monitor the inflow and outflow of their raw materials relative in their production of clothes. The board members of the company have separate views in employing FIFO costing method or the Moving Average costing method since according to most of them, their major raw material which is cotton doesn't even have an expiration date, and…

Activity-based costing tends to pass the cost-benefit test for companies with  A. Operations that are relatively simple  B. Many products that use different amounts of resources C. Many products that use about the same amount of resources D. Few products that use about the same amount of resources

Which of the following statements about activity-based costing (ABC) is false? Group of answer choices Activity-based costing differs from traditional costing systems in that products are not cross-subsidized. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. Activity-based costing is useful for allocating marketing and distribution costs. In activity-based costing, cost drivers are what cause costs to be incurred.

If the Activity-Based Costing (ABC) method's main intention is to find a possibility to cut the Overhead and indirect costs from the cost of production, is the blow statement correct? Please explain thoroughly with examples and restate the correct statement if it is false. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a lower unit cost resulting for the high volume products. When a company implements activity-based costing, manufacturing overhead cost is often shifted from high volume products to low volume products, with a higher unit cost resulting for the low volume products. Does the shift from low-volume to high-volume or vice versa affect the product cost?