Shipping, selling, marketing, sales order processing, return processing, and advertising activities can be related to products by using activity-based costing. Would allocating these activities to products for financial statement reporting be acceptable according to GAAP?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
- Shipping, selling, marketing, sales order processing, return processing, and advertising activities can be related to products by using activity-based costing. Would allocating these activities to products for financial statement reporting be acceptable according to GAAP?
- What would happen to net income if the activities noted in Discussion Question 6 were allocated to products for financial statement reporting and the inventory increased?
- Under what circumstances might the activity-based costing method provide more accurate product costs than the multiple production department factory
overhead rate method? -
When might activity-based costing be preferred over using a relative amount of product sales in allocating selling and administrative expenses to products?
- Under what two conditions would the multiple production department factory overhead rate method provide more accurate product costs than the single plant wide factory overhead rate method?
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