Process costing is used for homogenous products (continuous flow processes such as producing cans of soda). Job-order costing is used in situations where the organization offers many different products or services‚ such as in furniture manufacturing‚ hospitals‚ and legal firms. Process costing is used where units of product are homogeneous‚ such as in flour milling or cement production. The purpose of a job order cost accounting system is to assign and accumulate costs for each job‚ i.e
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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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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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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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charged with training his or her employees choose an appropriate method? This article defines some of the most common training methods and reviews pros and cons for each one. The method by which training is delivered often varies based on the needs of the company‚ the trainee‚ and on the task being performed. The method should suit the audience‚ the content‚ the business¡¦ environment‚ and the learning objective. Ideally‚ the method chosen will motivate employees to learn‚ help employees prepare themselves
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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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Chapter 3 Systems Design: Job-Order Costing Types of Costing Systems Used to Determine Product Costs Process Costing Chapter 4 Chapter 4 Job-order Costing Many different products are produced each period. Many different products are produced each period. Products are manufactured to order. Products are manufactured to order. Cost are traced or allocated to jobs. Cost are traced or allocated to jobs. Cost records must be maintained for each distinct Cost records must be maintained for
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allocated by using two common methods known as the direct method and step-down method. The direct method is used “ to allocate costs from the general services departments to each patient service department in one step” (Smith‚ 2014). The direct method calls for financial accounting to document the immediate movable expenses that is in each cost pot and to choose a cost controller for the indirect pot (Smith‚ 2014). The step-down method is almost like the direct method‚ the only difference is that
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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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Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing. Aims of model With ABC‚ a company can soundly estimate the cost elements of entire products ACTIVITIES and services. That may help inform a company’s decision to either: Identify
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