15.514 Summer 2003 Session 17 Activity-Based Costing Objectives 1. Computation of product costs using ABC 2. Understand the role of judgment: how are cost pools and cost drivers determined? 3. Link cost data to strategic choices Game Plan & Class Pedagogy Case discussion. Reading Assignment CP: Siemens Electric Motor Works Class Preparation Questions Focus your group’s attention on the qualitative questions (1 -6). Attempt to answer questions 7 and 8 before coming to
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THE INNOVATION OF TIME-DRIVEN ACTIVITY-BASED COSTING Robert S Kaplan; Steven R Anderson Cost Management; Mar/Apr 2007; 21‚ 2; ABI/INFORM Global pg. 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission
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What are the advantages and disadvantages of principles-based accounting? Perhaps the primary benefit of principles-based accounting rests in its broad guidelines that can be applied to numerous situations. Broad principles avoid the pitfalls associated with precise requirements that allow contracts to be written specifically to manipulate their intent. A 1981 study sponsored by FASB found evidence that managers purposefully try to structure leases as operating leases to avoid incurring additional
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Compare and contrast job order costing to process costing methods. Comparison: These systems are to determine the manufacturing costs of products. Both costing systems combine direct materials‚ direct labor and overhead which is indirect costs or could be considered a direct cost in the process costing method nonetheless both systems use this in the process of producing products. The manufacturing accountants assign cost objectives to raw materials inventory‚ work in process inventory and finished
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ADVANTAGES OF KAIZEN COSTING There are certain basic principles which are followed in various Japanese companies which are listed below: - 1) Focus on customers: The Kaizen philosophy has only one prime objective of customers’ satisfaction. Kaizen permits no middle ground its either you provide best products and customer satisfaction or not. All the activities should aim at providing customer with whatever he wants and should help the firm long term objective of customers’ satisfaction at
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Topic: The impact of activity-based costing on banking industry performance Activity-based costing (ABC) gives a true cost for the bank compared to traditional costing‚ which allocates most of the expenses. Banking has become very competitive‚ and it has become imperative that banks like any other businesses allocate their resources to the most profitable areas. For banking industry‚ in particular‚ the potential benefits of activity-based costing (ABC) implementation can be numerous. These include
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Relevance lost: the rise and fall of activity-based costing by: Nitza Geri & Boaz Ronen A Critique After having been exposed on how activity-based costing works‚ I am wondering why it is not adopted by all of the companies. While it is true that the debate between the traditional cost system and the activity-based cost system seem to be endless‚ here is paper written by Nitza Geri and Boaz Ronen that introduces another concept and that is global decision-making methodology or GDM. Through
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plagiarism. Activity Based Costing and the Theory of Constraints are‚ respectively‚ Overhead Absorption Costing and Marginal Costing in a different guise Introduction In this assignment I will be investigating the assertion that Activity Based Costing and the Theory of Constraints are‚ respectively‚ Overhead Absorption Costing and Marginal Costing in a different guise. To analyse this statement I will
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Chapter 3 - Activity-Based Costing -Rather than use a plantwide overhead rate (POHR)‚ many companies use departmental overhead rates with a different predetermined overhead rate in each production department. The nature of the work performed in a department will determine the department’s allocation base -Ex. Overhead costs in a machining department may be allocated on the basis of machine-hours. In contrast‚ the overhead costs in an assembly department may be allocated on the basis of direct
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Journal of Accounting Research Vol. 40 No. 3 June 2002 Printed in U.S.A. The Association Between Activity-Based Costing and Manufacturing Performance C H R I S T O P H E R D . I T T N E R ‚∗ W I L L I A M N . L A N E N ‚† A N D D A V I D F . L A R C K E R∗ Received 20 May 1999; accepted 23 October 2001 ABSTRACT This study examines the association between activity-based costing and manufacturing performance. Results using a cross-sectional sample of manufacturing plants indicates that extensive
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