Nobody downloaded yet

Activity Based Cost accounting system - Math Problem Example

Comments (0) Cite this document
Summary
Activity Based Costing encourages managers to watch activities or functions that are value added . These are operational acts that help identify the activities or functions that get customers. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.9% of users find it useful
Activity Based Cost accounting system
Read TextPreview

Extract of sample "Activity Based Cost accounting system"

Download file to see previous pages In this case study, the supporting excel computations show that overhead using the traditional cost accounting procedure resulted only P137,994.00 for Lever, P22,079.04 for Spring, and finally P 16,559.28 for pump products. Total manufacturing cost also under the traditional or old fashioned cost accounting procedure resulted to the usual Direct Materials cost of the products P 510,000.00 for Lever, P163,200.00 for Spring, and P 139,200.00 for Pump. Another accounting cost for resulting from the Traditional Cost Accounting procedure is the Regular item Direct labor of P 2,160,000.00 for Lever, P163,200.00 for Spring and again P16,560.00 for Pump. The total manufacturing cost under the Traditional method is the sum of Direct Materials, Direct labor and Overhead. P2,807,994.00 for Lever, P348,479.04 for Spring, and finally P 172,319.28 for pump products. Under the Activity Based Costing, The first cost driver is called VOLUME DRIVER showing amount of P 286,000.00 for Lever, P45,760.00 for Spring and P 34,320.00 for Pump. Another driver in this systems is the PURCHASING DRIVER. The purchasing cost for Lever products is P 14,810,000.00 and P2,369,600 for Spring and, the last item, P 1,777,200.00 for Pump. The next driver is the SET UP driver. Set up driver cost are P 38,533,000.00 and P 6,165,280.00 for Spring and of course P 4,623,960.00 for the last item, Pump. The cost drivers are higher than the total manufacturing cost of the traditional cost accounting system. In this new system, the cost factors can easily be traced to determine what the effects of these costs are to over all manufacturing operations. Some cost activities that will not help in the manufacturing process but sometimes, their costs are included in the factory cost of production in error. The Purchasing cost driver will display if the inventory cost is too high or too low or even unnoticed thus affecting the decision making process of management.

Traditional Cost Accounting






Direct Materials








Lever (100,000 ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Activity Based Cost accounting system Math Problem”, n.d.)
Activity Based Cost accounting system Math Problem. Retrieved from https://studentshare.org/business/1514383-activity-based-costing-math-problem
(Activity Based Cost Accounting System Math Problem)
Activity Based Cost Accounting System Math Problem. https://studentshare.org/business/1514383-activity-based-costing-math-problem.
“Activity Based Cost Accounting System Math Problem”, n.d. https://studentshare.org/business/1514383-activity-based-costing-math-problem.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Activity Based Cost accounting system

The Activity Based Costing System

...? Accounting for decision making Contents Contents 2 Introduction 3 Effectiveness of Traditional and Activity Based costing system 7 Effectiveness ofTraditional Based costing system 7 Effectiveness of Activity Based Costing 10 Conclusion 13 References 14 Introduction Costing systems are types of information systems which require a particular type of information like the number of units produced and the number of direct labour hours of value that are involved in the process. These data are put as input...
10 Pages(2500 words)Assignment

COST ACCOUNTING SYSTEM DEVELOPMENT PROPOSAL

...problems may be encountered in measuring activity-cost pools and identifying and measuring allocation. The following example may illustrate the application of the ABC in the merchandising activity of the company: Activities: Ordering, Delivery, Stocking, Customer support Cost Allocation Base: Cost of placing each order, No of deliveries, cost of stocking and total items sold. A similar review of the online activity may be undertaken to identify the activities to which costs can be allocated and collected. 4.0 Conclusion: Although ABC...
2 Pages(500 words)Essay

Cost Management and Activity-Based Costing

... inside the company rather than purchasing them from an outer source which will be at a higher price 7. Assistant Salary – the salary of the assistant can be cut if a need arises These costs are not really going to affect the operation or the well being of the company in the time to come. 3. As mentioned before, budgets must be properly handled when there is a need to reduce them or great problems can occur. The first step to reduce the budget is to review the program and management achievements and fiscal performance over the year. This includes reviewing the objectives achieved, comparing budget to actual figures, and looking at the number of people served in each program. Based on this review, new goals and objectives should... of what...
4 Pages(1000 words)Essay

Cost Accounting

...RUNNING HEAD: Cost Accounting Cost Accounting of This paper seeks to comment on theremarks made by the Chief executive officer (CEO) of Home Workout Equipment Corporations to a colleague that he does not understand why other companies are wasting so much time in the budgeting process. For the said CEO, setting the company goals is done by him and that everyone would just need to strive to meet them. To follow what the CEO wants to be done may be easy for a number of managers and employees but not at all times. When the subordinates including the managers have to do some work that would require their decision-making skills in the work place, it would be hard...
2 Pages(500 words)Case Study

Cost Accounting and Cost Accounting System

...Cost accounting refers to the process of measuring, ifying, analyzing and collecting costs of a job, product. In summary, it is also the act of accounting for the occurrence and controlling costs with the objective of ascertaining operating efficiency of a business. On the other hand, cost accounting systems are the internal information systems structures and procedures that are applied by a company to ensure proper cost accounting. Cost system is one of the scopes of cost accounting, although both have a common objective of providing relevant decision making information to the management (Lal. 2008). The most important feature of a cost accounting system is the regularity with which relevant cost information is provided to users... . There...
1 Pages(250 words)Assignment

Managerial Accounting: Activity Based Costing

...Managerial Accounting: Activity Based Costing Introduction Managerial accounting is an approach to cost management that relies on accounting information for ‘decision-making’. The management is therefore equipped with accounting information for guidance. This paper seeks to discuss activity based costing as an element of managerial accounting. The paper will explore the approach to activity based costing, the relationship between activity based...
4 Pages(1000 words)Research Paper

Activity-Based Cost Reduction Information in Governance

... How Board and Audit Committee Utilize Activity-Based Cost Reduction Information in Governance Activity- based costing refers to an approach of allocating expenses in relation to resources consumed during the task of producing each of the products of services (Carver, 2011). When using this technique, the managers are able to assign both direct and fixed cost to each of the task in production of the products or services (Firstenberg and Schoff, 2009). The auditors are responsible for establishing the extent in which the company’s board or managers have achieved their production goals. The auditors will achieve their...
2 Pages(500 words)Coursework

Management Accounting & Activity Based Costing

.... In making of the product, inspection for quality evaluation requires the appointment of experts who consume money in terms of salary, travel, electricity, as well as the depreciation of the equipment. The overheads may be calculated based on the number of tests. Each batch requires 4 tests, and suppose the available batches are 200, then, 800 tests must be performed. If the inspection accounts for a total of £20,000, then rate per unit test can be calculated as 20000/800 = £25 per unit test. This amount accounts a combination of salary, electricity and travel. Therefore, the increased energy requirements result in high costs in evaluating the quality of the...
2 Pages(500 words)Essay

Conventional Cost Allocation Systems versus Activity Based Cost Systems

... Convectional Cost Allocation Systems versus Activity Based Cost SystemsCost management is a very significant aspect in accounting. Courtesy of the changing trends characterized by technology, need for simplicity as well as maximization of resources costing systems is changing. This has attracted diverse opinion from the accounting professionals as well as the business owners. There has been a debate on whether the convectional cost allocation systems such as the use of the general ledger system...
2 Pages(500 words)Essay

Cost allocation and activity based costing

...(Vercio & Shoemaker, 2007). The one approach to ABC is the equal assignment of the product-level activity costs to every product. On the other hand, batch level conditional setup costs are allocated to products based on the number of batches produced. However, a higher level of Activity Based Costing requires that the conditional setup be accounted for as product level costs rather than batch level cost. Vercio and Shower assert that there is no regular method for Activity Based Costing. The available approaches to ABC...
4 Pages(1000 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Math Problem on topic Activity Based Cost accounting system for FREE!

Contact Us