feasibility of using an alternative costing method – Activity based costing (ABC) in the latter paragraphs. The issue of misallocation cost With the use of Traditional Absorption Costing (TAC) which means Wilkerson Company is now only put the costing of direct labor and material in place. As we can see the table 1 below‚ the percentage of total direct cost allocation in Valves‚ Pumps and Flow Controllers are 46%‚ 46% and 52% respectively‚ and so for the manufacturing overhead are 54%‚ 54% and
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of valves. The conventional costing system is used to trace and as well as to accumulate all of the direct costs and then disseminates the indirect costs of a manufacturing process. And so in this case‚ it is known that Mahir Industrial’s conventional costing system is used firstly‚ in order to find out every manufacturing department’s product costs. Besides that‚ the company’s direct cost consists of valves‚ pumps and as well as flow controllers. Secondly‚ another reason why the company uses conventional
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Name__________________________________ 1. The following information relates to a job cost system in a factory: For the year Estimated Actual Factory Overhead $600‚000 $635‚000 Direct Labor $500‚000 $525‚000 Direct Materials $500‚000 $520‚000 Direct Labor Hours 300‚000 hrs. 290‚000 hrs. The factory uses a predetermined overhead rate per direct labor hour to apply factory overhead. During the year jobs which cost $1‚200‚000 were completed‚ and finished goods costing $1‚000‚000 were
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Problem5-18A Pricing decisions made with ABC system cost data Morello Sporting Goods Corporation makes two types of racquets‚ tennis and badminton. The company uses the same facility to make both products even though the processes are quiet different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that June Searight‚ the cost‚ accountant‚ prepared for the third quarter of 2011 (during which Morello made 70‚000 tennis racquets
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Manufacturing Overhead Manufacturing overhead costs play a vital role in determining final cost of the product. Manufacturing overhead represents all the costs that the company incurs indirectly and not related to the cost of direct labor‚ direct materials or direct cost of machines (Donald‚ 2010). In short‚ companies are not able to trace these costs to individual items during the manufacturing process. Examples of overhead costs include factory supplies‚ costs emanating from compliance with local‚ state
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Case Background Classic Pen Company had been the low-cost producer of traditional BLUE pens and BLACK pens. They had been thinking to extend their product line into new products that offer premium selling price. Consequently‚ five years earlier they introduced RED pens‚ which were sold at 3% premium price. A year back they introduced PURPLE pens‚ which sold at 10% premium price. Though the new products seem profitable‚ there has been a dip in the overall profitability and the new products are
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allocation‚ activity-based costing‚ manufacturing sector Overhead Costs: Wages & Salaries Depreciation Rent Other O/H Total O/H Cost $ $ Direct Mfg. Labor Support Wages & Salaries $ 192‚000 Depreciation 15‚000 Rent 36‚000 Other O/H 48‚000 Total O/H Cost $ 291‚000 Activity Rate $ 9.70 Traditional $ 9.70 Order 448200: Direct Mfg. Labor Order Process Design Support Other Direct Materials Direct Labor Direct labor rate/hour Activity Cost Pool Drct Mfg. Labor Order Process Design Support Other 480‚000
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distribution network ………………….. 3 4.4 Target costing ………………………………………………………………………………………………. 3 4.5 Customer profitability ………………………………………………………………………………….. 3 4.6.1 Customer Revenue …………………………………………………………………. 3 4.6.2 Customer Costs ………………………………………………………………………. 4 4.6 Rolling forecasts strategy …………………………………………………………………………….. 4 4.7 Balance score card ……………………………………………………………………………………….. 4 4. Recommendation/Conclusion ……………………………………………………………………. 4 APPENDIX …………………………………………………………………………………………………
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the following items would be included as part of factory overhead in a microcomputer manufacturer? a. b. c. d. e. the cost of memory chips wage of computer assemblers depreciation of computer assemblers salary of marketing director all of the above 2. Inventoriable costs a. b. c. d. e. include only the prime costs of manufacturing a product. include only the conversion costs of manufacturing a product. are expensed when products become part of finished goods inventory. are regarded as assets before
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1. Compute the cost of a single preschool class and a single birthday party using the current cost system. Preschool Class Costs Birthday Party Costs Building Related $216‚000 Does not count Salaries $50‚000+$20‚000*2=$90‚000 $5‚000*2=$10‚000 Supplies & Foods $18‚000 $3‚000 Advertising Does not count Does not count Total $324‚000 $13‚000 Unit Cost $270 $86.67 2. Would you recommend that TRU continue to allocate the building-related costs only to the preschool program? What alternative
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