cost management system called COMEX (cost management expert system). The article offers an explanation of what the system is designed to do and how it assists billing departments within a company in particular. The system assists in the gathering of costing data pertaining to products‚ services and customers (Grahovac & Devedzic‚ 2010). Cost management is vital to the success of any business thus this article is very useful. Beyond that‚ the article is very detailed and descriptive so as to not leave
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using activity based costing to allocate operating expenses to products and customers. The overall process is important to the ultimate success of the bank‚ so it needs to be logical and transparent. The bank’s project team came up with 3 questions for the activity-based costing: “How should it define resource pools? What activities should it define? Should it analyze costs by product or by customer?” These questions seem very logical in helping implement the activity based costing. By writing the parts
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those products that were more costly to produce were priced lower than their actual cost price. 2. Provide a brief analysis of the attached (page 2 of this document) activity-based costing system. Do you agree with the activities and/or cost drivers identified for each activity? Why or why not? The activity based costing divides the operating costs into five different areas and allocates the overheads based on the actual costs incurred by each activity. In this case the operating costs are divided
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greater differences between relative proportions of indirect resources used by cost objects because traditional cost assignments based on volume-related measures do not accurately reflect these differences. 5-2 Volume-based traditional product costing systems that use only drivers that vary directly with the volume of products produced—such as direct labor dollars‚ direct labor hours‚ or machine hours—are most likely to distort product costs under the following two conditions: (1) Indirect and
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Super Bakery‚ Incorporated Costing Methods Super Bakery Incorporated (SBI) is a successful virtual corporation focused on supplying donuts and other baked goods to the institutional food market. SBI was founded in 1983 by former Pittsburgh Steelers’ running back Franco Harris. The management has used an outsourcing strategy‚ whereby‚ selling‚ manufacturing‚ warehousing‚ and shipping functions have been outsourced to strategic partners. The goal is to extract the maximum value-added from these
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Table of Contents Page Declaration Abstract 3 Introduction 4 Method Of Costing 5 What drive them to use that method 6 Short Term Strategy 7 Long Term Strategy 8 Future Plans 9 Important Issues 10 Conclusion 11 Bibliography 12 Declaration We declare that this assignment is result of our own hard work‚ understanding and research based on
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No‚ I would not recommend TRU continue to allocate the building-related costs only to the preschool program because it is not an accurate way to compute the actual costs for Birthday Party product. I would suggest TRU to use the activity based costing allocation method. To use this method‚ I would need additional information on: exact labor hours spent both on preschool class and birthday party‚ and the exact number of children who are attending preschool program and the birthday party. 3.
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calculate its own overhead rate based on department’s overhead and its own base 3. The activity-based costing method. Overhead rate is calculated base on each activity or task. Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of machine hours. Activity based costing first assigns costs to the activities that are the real cause of the overhead. It then assigns the cost
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1. Product costs used for pricing and product-mix decisions generally include: Answer | | manufacturing costs only | | | design costs plus manufacturing costs | | | all costs incurred along the value chain | | | distribution costs only | 0.1 points Question 4 Within the relevant range‚ if there is a change in the level of the cost driver‚ then: Answer | | fixed and variable costs per unit will change | | | fixed and variable costs per unit will remain the
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Sometimes a cost that is mostly variable. The plots help determine whether regression analysis should be performed using any of the potential drivers. 6. Why the cost per unit under the traditional costing system is different from the cost per unit under the ABC system. In the traditional costing system‚ the indirect costs were combined into a single cost pool and then allocated based on direct labor hours used by each order. Direct labor hours may or may not
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