Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

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Answer 1

Question

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.

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Answer 2

Question

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.

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Answer 3

Question

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.

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Answer 4

Question

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.

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Answer 5

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.

Answer 6

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.

Answer 7

Chapter 5, Problem 1LO

To determine

Explain the manner in which activity based costing system improves accuracy in calculating the cost of goods and services.

Answer 8

Expert Solution & Answer

Explanation of Solution

Activity-based costing:

ABC (activity-based costing) is a method used for recognizing and allocating the costs to overhead activities undertaken in the company and assigning those costs to the product.

Activity based costing system underlay the fact that the company has 2 activity pools associated to overhead cost. Cost driver is the pool that is utilised to allocate the cost of each product and companywide overhead rate helps in allocating overhead cost. Therefore, ABC (activity based costing) analysis reflects the correct fact and the effective relationship of the company.