ACCT346 Discussions Week 4

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ACCT346 Discussions Week 4
How does activity-based costing differ from the traditional costing approach? When would it…

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ACCT346 Discussions Week 4

ACCT346 Discussions Week 4

All Students Post 96 Pages

Activity-Based Costing – 50 Pages

How does activity-based costing differ from the traditional costing approach? When would it give more accurate costs than traditional costing systems?  What are cost allocations? What are 4 main reasons companies allocate costs to products? Choose ONE and explain how this process would benefit management….

PROBLEM #1. Activity Based Costing (ABC):
(EVERYONE should do this problem and post a solution even if others already have.)
Harold Company makes two products and is implementing an Activity Based Costing (ABC) system. Previously, all overhead had been applied on the basis of machine hours. The Company produces 400,000 units of product A and 20,000 units of product B.
The problem is based on the following categories:
Cost Pool
a)Driver and Level
b)Cost in Pool
c) Use of Driver by Product A
d) Use of Driver by Product B
I Equipment Setup
a) 2500 setups
b) $2,000,000
c) 1,350 setups
d) 1,150 setups
II Materials Ordering
a) 50,000 orders
b) $5,000,000
c)20,000 orders
d)30,000 orders
III Quality Control
a)40,000 inspections
b) $900,000
c) 15,000 inspections
d) 25,000 inspections
IV Machining
a) 50,000 machine hours
b) $6,000,000
c) 10,000 machine hours
d) 40,000 machine hours
A) Using ABC what is the cost per machine hour in the Machining pool?
B) Using ABC what is the cost per setup in the Equipment Setup Pool?…

Incremental Cost Analysis – 46 Pages

What is meant by relevant costs?  What is meant by differential costs? How do constraints relate to manufacturing companies? How would you tie all these ideas together with costs that need to be included in the decision making process?…

Problem (#1) for everyone to work on.
Zoom Company’s market for the Model #6549 has changed significantly, and Zoom has had to drop the sales price per unit from $1,000 to $625. There are 1000 units in the work in process inventory that have costs of $670 per unit. Zoom could sell these units in their current state for $280 each. It will cost Zoom $208 per unit to complete these units so that they can be sold for $625.
a) Which of these dollar amounts were not relevant in this problem? WHY?
b) Which amounts are relevant to any decision? WHY?
c) Which costs are “sunk” costs? WHY?
d) If we are dealing with 1000 units, what is the total dollar difference by re-working the units instead of not re-working them? SHARE your calculation…