Activity based costing: Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity. Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost. Difference between activity-based costing and traditional costing methods.

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Answer 1

Question

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

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Students have asked these similar questions

Suppose you take out a five-year car loan for $14000, paying an annual interest rate of 4%. You make monthly payments of $258 for this loan. Complete the table below as you pay off the loan. Months Amount still owed 4% Interest on amount still owed (Remember to divide by 12 for monthly interest) Amount of monthly payment that goes toward paying off the loan (after paying interest) 0 14000 1 2 3 + LO 5 6 7 8 9 10 10 11 12 What is the total amount paid in interest over this first year of the loan?

Suppose you take out a five-year car loan for $12000, paying an annual interest rate of 3%. You make monthly payments of $216 for this loan. mocars Getting started (month 0): Here is how the process works. When you buy the car, right at month 0, you owe the full $12000. Applying the 3% interest to this (3% is "3 per $100" or "0.03 per $1"), you would owe 0.03*$12000 = $360 for the year. Since this is a monthly loan, we divide this by 12 to find the interest payment of $30 for the month. You pay $216 for the month, so $30 of your payment goes toward interest (and is never seen again...), and (216-30) = $186 pays down your loan. (Month 1): You just paid down $186 off your loan, so you now owe $11814 for the car. Using a similar process, you would owe 0.03* $11814 = $354.42 for the year, so (dividing by 12), you owe $29.54 in interest for the month. This means that of your $216 monthly payment, $29.54 goes toward interest and $186.46 pays down your loan. The values from above are included…

Suppose you have an investment account that earns an annual 9% interest rate, compounded monthly. It took $500 to open the account, so your opening balance is $500. You choose to make fixed monthly payments of $230 to the account each month. Complete the table below to track your savings growth. Months Amount in account (Principal) 9% Interest gained (Remember to divide by 12 for monthly interest) Monthly Payment 1 2 3 $500 $230 $230 $230 $230 + $230 $230 10 6 $230 $230 8 9 $230 $230 10 $230 11 $230 12 What is the total amount gained in interest over this first year of this investment plan?

Answer 2

Question

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

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Answer 3

Question

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

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Answer 4

Question

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Answer 6

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Answer 7

Chapter 7, Problem 1Q

To determine

Activity based costing:

Activity based costing is analyzing the expenses with the help of activities. Monetary measure to the expenses and activity measure to the expenses shows difference with respect to the production cost, product cost and sales cost. Activity based costing helps to analyze the activity by segregating the cost associated with each activity.

Under traditional method, volume is the base for cost but under activity based costing, activity is the base for the cost.

Difference between activity-based costing and traditional costing methods.

Answer 8

Expert Solution & Answer

Answer to Problem 1Q

Solution:

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Under traditional method, costs are divided into direct cost, indirect cost, fixed cost and variable cost. Although, under activity-based costing, costs are divided into unit cost, batch cost, product cost, organizational cost, etc., traditional method is a production-based outlook.
Activity based method is production and sales based. Under activity based method, it is easy to analyze how to manage the competition. There are so many ways to manage the competition like increasing the production, increasing the marketing, reducing the pricing, etc.Traditional method is useful in arriving at the accurate price of the product. Activity based accounting is helpful in analyzing the competition and how to arrive at the solution to overcome the competition.
Under job order costing, different jobs are recorded but not distinguished as per the nature of the job. Although, there are only three processes, but under activity-based costing, the grouping is as per the production and promotion which helps a lot.
Job costing is classification of the job as per the product or volume but under activity-based costing, classification is as per the nature of activity not the nature of the product.

Job costing and activity-based costing differs with the following points:

Allocation of expenses.
Unit rate of activity.
Analysis for pricing and competition.

Answer 12

Conclusion

Activity based costing is activity based and traditional method is volume based. Both the method differs with respect to allocation of expenses, calculation of unit rates and analysis.

Answer 13

Ch. 7.A - EXERCISE 7A-1 Time-Driven Activity-Based Costing...Ch. 7.A - EXERCISE 7A-2 Time-Driven Activity-Based Costing...Ch. 7.A - EXERCISE 7A-3 Time-Driven Activity-Based Costing...Ch. 7.A - PROBLEM 7A-4 Time-Driven Activity-Based Costing LO...Ch. 7.A - PROBLEM 7A-5 Time-Driven Activity-Based Costing LO...Ch. 7 - Prob. 1Q Ch. 7 - Prob. 2Q Ch. 7 - Prob. 3Q Ch. 7 - What are unit-level, batch-level, product-level,...Ch. 7 - What types of costs should not be assigned to...

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