Allocates overhead using a single predetermined rate. ► Job order costing: direct labor cost may be the relevant activity base. ► Process costing: machine hours may be the relevant activity base. Assumption was satisfactory when direct labor was a major portion of total manufacturing costs. ► Wide acceptance of a high correlation between direct labor and overhead costs. 4-3 LO1 Recognize the difference between traditional costing and activity-based costing.
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particular cost centre and charging them. For example‚ in this case wages paid to truck drivers is an overhead cost which is directly identifiable with the Cost Centre i.e. ACF. In case of expenses which cannot be directly identified with that cost centre or which are used by many cost centres allocation will be made on a suitable basis. For example‚ rent on the basis of floor area. The above mentioned methods are called as direct method (in case of direct identification with cost centre) and cost-driver
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Headquaters’ Overhead Cost Allocation at Korea Auto Insurance Co. Inc. | | | |Korea Auto Insurance Co. Inc. | | | | | | | |For periods 2007 thru 2008 | | | |
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Costing system and its structure within the manufacturing industry. Moreover‚ it defines steps within ABC application‚ as well as analyzing the input and output information and data required for effective utilization of the system. The close bond between cost allocation methodology and application procedures is also determined within this work‚ thereby describing all the features necessary for effective ABC implementation. The results published herein come from research projects run over a 3-year timeframe
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basis of direct labour hours. The system has been in place with minimum change for 25 years. 1.2 THE CURRENT RISING ISSUE For the past 10 years‚ the company’s pricing has been to set each product’s budgeted price at 110 per cent of its full product cost. Recently‚ however the standard-model motor has come under increasing price pressure from offshore competitors. As a result the price on the standard model has been lowered to $110. The company CEO recently had a discussion with the financial controller
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Dakota’s Current Pricing System Purchased product costs are marked up by 15% to cover the cost of warehousing‚ distribution‚ and freight. An additional markup is added to cover the approximate cost for general and selling expenses‚ plus an allowance for profit. The markups were determined at the start of each year‚ based on actual expenses in prior years and general industry and competitive trends. Actual prices to customers were adjusted based on long-term relationships and competitive situations
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method of cost accounting by marking up purchased products by 15% to cover warehousing‚ freight‚ and distribution and then adding another markup to cover general and selling expense plus an allowance for profit. Dakota has also introduced electronic data exchange (EDI) and a new internet site which allowed customer orders to be placed so that clerks would not have to enter customer and order data manually. Several customers have switched to this method for the convenience but Dakota’s costs have continued
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Misallocation of costs may lead to incorrect price estimates‚ continuous production of unprofitable products‚ and ineffective processing schedules. In this case study‚ we will discuss the costing methods which Zauner Ornaments have used or is currently using and‚ in conclusion‚ be able to distinguish the advantages and disadvantages of each costing method. CASE CONTEXT The case seeks to assist Zauner’s comptroller‚ Yu Chia-yi‚ in determining the best costing method for their overhead costs. In addition
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overhead costs to departmental pools and then assigns these costs to products using predetermined overhead rates. a. True b. False ANSWER: True 2. Management information systems can be divided into a unit-based type and activity-based type. a. True b. False ANSWER: True 3. Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level. a. True b. False ANSWER: False 4. Unit-level drivers are factors
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University College Dublin National University Of Ireland‚ Dublin Management Accounting (MA) MAIN ASSIGNMENT NUID: BSc 14B Finance Lecturer: Jane Cao Name: Pham Thi Thanh Dung Student Number: 10286411 Date of submission: Nov 28‚ 2011 I declare that all materials include in this essay/report/project/dissertation is the end result of my own work and that due acknowledgement have been given in the bibliography and references to ALL sources be they printed‚ electronic or personal. Confirmation
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