Introduction E xc e r p t e d fro m Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Performance By Robert S. Kaplan and Robin Cooper Harvard Business School Press Boston‚ Massachusetts ISBN-13: 978-1-4221-1596-1 1596BC Copyright 2006 Harvard Business School Publishing Corporation All rights reserved Printed in the United States of America This chapter was originally published as chapter 6 of Cost & Effect: Using Integrated Cost Systems to Drive Profitability and
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Sept. 17-20‚ 1995. THE USE OF ACTIVITY-BASED COSTING‚ UNCERTAINTY‚ AND DISASSEMBLY ACTION CHARTS IN DEMANUFACTURE COST ASSESSMENTS Bert Bras and Jan Emblemsvåg The Systems Realization Laboratory The George W. Woodruff School of Mechanical Engineering Georgia Institute of Technology Atlanta‚ Georgia 30332-0405 ABSTRACT In this paper‚ the development of an Activity-based Cost (ABC) model is presented for use in design for demanufacture under the presence of uncertainty. Demanufacture is defined
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fundamental cost objects. It uses the cost of these activities as the basis for assigning costs to other cost objects such as products or services. There are four levels of a cost hierarchy: 1- Output unit-level costs: costs of activities performed on each individual unit of a product or service. 2- Batch-level costs: costs of activities related to a group of units of products or services rather than to each individual unit of product or service. 3- Product-sustaining costs or service-sustaining
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GIBSON INSURANCE COMPANY Activity-Based Costing; Allocating Corporate Costs DATE OCT 22‚ 2012 CASE ANALYSIS Gibson Insurance Company sells two types of financial products: annuities and life insurance‚ all sales are done by in-house agents. The annuities are tax deferred investments that offer scheduled payout options and lump sums to their investors. The life insurance policies pay benefits to the designated beneficiaries in the event the policyholder passes away. At the end of
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from the sale of unframed and framed prints‚ They are especially enthusiastic about this revenue source because the online nature of the product enables them to generate revenue without the additional cost of carrying inventory. Wall Décor sells unframed and framed prints to each store at product cost plus 2oo/o. Ã 20o/o rnarkup on products is a standard policy of all Greetings intercompany transactions. Each store is allowed to add an additional markup to the unframed and framed print items according
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liquidity‚ if it tightens its credit policy. | | | | | 2) Develop an activity based cost system for Dakota office products based on year 2000 data. Calculate the activity cost driver rate for each DOP activity in 2000. Activities & Costs | Activities | Drivers | Costs | Ship Cartons | No. of cartons | Freight( commercial& Own) | Process Cartons | No. of cartons | Warehouse Costs(Rent‚ Personnel & Distribution) | Desktop Delivery | No. of deliveries | Delivery Truck
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and use the system. An Activity Based Costing system can be costly and time consuming to implement and maintain‚ it requires extensive training‚ expertise and information. However‚ the benefits of Activity Based Costing systems‚ being improved cost accuracy and assisting management with decision
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Questions 2-4 The estimated costs calculated using the activity-based costing method is very different from the existing standard unit costs and the revised unit costs. Exhibit 3 uses the traditional cost allocation system‚ which allocates all costs based on measures of volume. In the standard unit costs‚ Destin Brass uses direct labor as the only cost driver‚ which rarely meets the cause-effect standard wanted in cost allocation. Exhibit 4 is similar to exhibit 3‚ but instead‚ 4 uses materials
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of assigning shipping and warehousing costs to Sharp’s products. Shipping and warehousing costs are currently assigned using tons of paper produced‚ a unit-based measure. Many of these costs‚ however‚ are not driven by quantity produced. Many products have special handling and shipping requirements involving extra costs. These costs should not be assigned to those products that are shipped directly to customers. 2. Compute the shipping and warehousing cost per ton of LLHC sold by using the new
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management accountant computes a cost Opportunity cost : an opportunity cost is the sacrifice one makes when using a resource. Fix cost : they vary with the amount of capacity acquired--not on the amount of capacity used Includes: Most personnel costs and depreciation on machinery and buildings. Direct cost : the cost of a resource or activity that is acquited for or used by a single cost object Indirect cost : the cost of a resource that is used by more than one cost object. What are two broad
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