Variable costing and absorption costing are the two most commonly used methods of inventory costing for manufacturing companies. The inventory method of variable costing takes place when total direct and indirect variable manufacturing costs are included within inventoriable costs. Fixed manufacturing costs however‚ are considered costs of the period under variable costing. The next method of inventory costing‚ absorption costing‚ includes all variable manufacturing costs as well as fixed manufacturing
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Reynolds Tobacco Co.’s new brand of cigarette called “Dakota” is mainly that of demographics‚ and psyhcographics. The target market in this case appears to be poorly educated‚ virile white females age 18-20‚ who enjoy being around their boyfriends and doing whatever their boyfriends are doing‚ for example going to “Hot Rod shows‚ Tractor Pulls‚ cruising‚ and going to parties”. This target market was most likely selected for two main reasons. The first is because of the enormous profits to be gained
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TARGET CORPORATION Introduction The Target Bulls-eye logo has become instantly recognizable and synonymous with high quality and style at affordable prices. From its origins in 1902 as The Dayton Dry Goods Company in Minneapolis‚ Minnesota to the opening of the first Target store in 1962 in Roseville‚ Minnesota‚ Target Corporation has grown into one of top five retailers in the United States today with over 1‚600 stores and 350‚000 employees. Total revenues and net earnings for 2008 reached
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MODULE M6 Financial Management of Corporate Projects and Programmes Case: TARGET CORPORATION 1. Executive Summary Target corporation has a growth strategy of opening 100 new stores per year. Doug Scovanner‚ the CFO of Target Corporation is preparing for the November meeting of the Capital Expenditure Committee (CEC). He is one of the executive officers who are members of the CEC. With the fiscal
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Absorption and marginal costing (Relevant to AAT Examination Paper 3: Management Accounting) Li Tak Ming‚ Andy Deputy Head‚ Department of Business Administration‚ Hong Kong Institute of Vocational Education (Kwai Chung) Introduction Absorption costing and marginal costing are alternative cost accumulation systems used to ascertain product or job costs for inventory valuation and cost of sales. Absorption costing Absorption costing includes both variable and fixed production costs in the
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Activity Based Costing The major strength of activity based costing is the ability to estimate the cost of individual products and services precisely. By transferring overhead costs to individual units of products or services‚ ABC helps identify inefficient or non-profitable products or activities that help into the profitability of efficient processes or highly profitable products. 1. More accurate costing of products/services Product cost determination under activity-based costing is more accurate
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VARIABLE COSTING Learning Objectives 1. Explain the accounting treatment of fixed manufacturing overhead under absorption and variable costing. 2. Prepare an income statement under absorption costing. 3. Prepare an income statement under variable costing. 4. Reconcile reported income under absorption and variable costing. 5. Explain the implications of absorption and variable costing for cost-volume-profit analysis. 6. Evaluate absorption and variable costing. 7
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ABC Costing Activity-based costing (ABC) is a special costing model 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 models. Aims of model With ABC‚ an organization can soundly estimate the cost elements of entire products and services. That may prepare decisions on
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Chapter 4-1 Activity-Based Costing Managerial Accounting Fifth Edition Weygandt Kimmel Kieso Chapter 4-2 study objectives Chapter 4-3 1. Recognize the difference between traditional costing and activity-based costing. 2. Identify the steps in the development of an activity-based costing system. 3. Know how companies identify the activity cost pools used in activity-based costing. 4. Know how companies identify and use cost drivers in activitybased costing. 5. Understand the benefits
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Airline Operating Costs By Peter Horder‚ Senior Vice President SH&E Ltd Prepared for: MANAGING AIRCRAFT MAINTENANCE COSTS Conference Brussels‚ 22 January 2003 Agenda Introduction Current Airline Environment Airline Cost Elements Indirect and Direct Operating Costs Overhead Cost Control Balance Sheet Effects Reference Sources Conclusions 1 Introduction Current airline environment Safety considerations and costs – Security restrictions – Insurance implications Cost reduction
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