Your company management wants you to compare the list of materials for HML and ABC analysis.For ABC classification they set the following criteria;Items below SR 100000 annual consumption shall be considered as C-items,items between SR 100000 and SR 150000 shall be considered as B-items,and items above SR 150000 shall be considered as A- itemsFor HML classification they set the following criteria;Items below unit price SR 50 shall be considered as L-items,items between SR 50 and SR 100 unit price shall be considered as M-items,and items above SR 100 unit price shall be considered as H-items.Based upon your analysis suggest which classification shall be better for the company so that inventory can beoptimized. Justify your answer.Consumption(Units) AnnualPrice/unitSRConsumption(SR) AnnualItemH/M/LA/B/CA200040В300065C250090D2400100E230085F2600110G270035H2300105I2200130J250045

Cost Classification:- There are different bases available in cost accounting on which cost can be…

Answered: Your company management wants you to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4) Design ABC system for EON and Brothers (discuss steps) 5) What are the Costs per unit of Alfa and Beta under traditional and ABC costing systems?What would be the prices of Alpha and Beta traditional and ABC costing systems? Comparethe costs and prices calculated in the two systems (Calculations should be shown in theappendix) and for analysis 6) Discuss your recommendation on the viability of ABC for EON and Brothers Ltd., given thefinancial director's concerns.
The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 3,800 sets per year. Annual cost data at full capacity follow: Direct labor Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Administrative office supplies (billing) Administrative office salaries Direct materials used (wood, bolts, etc.) Utilities, factory $ 89,000 $ 103,000 $70,000 $ 23,000 $ 65,000 $ 6,000 $ 2,000 $ 17,000 $ 18,000 $ 106,000 $ 5,000 $ 111,000 $ 426,000 $ 46,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling…
AVERAGE AND FIFO COSTING TRUE OF FALSE Indicate whether the following statements are true of false by inserting in the blank space provided a capital “T" for true of “F” for false. Using the FIFO method: If, for any period, the beginning Finished Goods Inventory is zero, then the average ending unit cost in Finished Goods Inventory is either a number between the unit cost in the beginning WIP inventory and the current period unit costs, or it is equal to the current period unit cost. Using the FIFO method: If the units transferred out exceeds the equivalent units in WIP beginning inventory, then the unit cost of the ending WIP inventory will equal the current period unit cost. Using the FIFO method: If the beginning WIP inventory is zero, then the unit cost of units transferred out will always equal the unit costs of the units in ending WIP inventory. Using the FIFO method: The number of units transferred out equals the number of units started and completed plus the equivalent units…

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