Accounting Quiz Week 7

Activity-based costing can be defined as the managers allocate costs depending on the quantity of resources a product or service consumed in the manufacture of goods and services. The activity based

Activity-based costing is a system of accounting that puts emphases on activities performed to produce products or services (Schneider, 2012). In this costing system every activity is assigned a cost (Schneider, 2012). The goal of activity-based costing is not to allot common costs to products but to measure and then price out all the resources used for activities that sustain the production and delivery of products and services to customers (Mazumder, 2007). Activity-based costing is a cost system that is useful in business because of the fact that it does account for the cost of the products, resources used to produce the product and delivery of the product.

E1-5 Cougar’s Accounting Services provides low – cost tax advice and preparation to those with financial need. At the end of the current period, the company reports the following amounts: Asset – 19000; Liabilities – 15000; Revenues – 28000; Expenses = 33000

The first item at hand is what kind of detail does activity based costing provide that is different than traditional costing?

This paper provides a brief presentation of Activity-Based Costing methodology, how is used as well as its short comings.

uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company 's manufacturing overhead data:

Fixed Manufacturing Overhead in Ending Inventory: $18,000 (5,000 units in ending inventory * $3.60 of fixed manufacturing overhead per unit)

We will examine the given data from the case and compare the unit costs from the company’s current costing system (traditional costing) and from activity-based costing. We will also highlight other qualitative data in consideration with the numerical factors that may result to a significant change on our recommendation.

Nowadays, we know that activity based costing system assigns overhead costs to products or services products that using a two-stage process, which focuses on activities. ABC is a relatively new and very important topic in managerial accounting. ABC allows us to find a way that we could determine the profitability of every product, profitability of every customer we serve, and the profitability of our process. Contents in brief, first that comparing potential advantages of ABC versus traditional costing methods. The

Accounting is the language of business; the operating budget is the company play book for the coming year. With the operating budget the company can forecast the overall health of the enterprise. Management is able to foresee the financial strength of the company based on the sales revenue, Cost of Goods Sold (COGS), the operation expense that then provides the budgeted income statement. Although good management is required to ensure a company’s fiscal health, the operation budget if well planned is the actual path that will ensure success.

C. T. Horngren, A. Bhimani, S. M. Datar, G. Foster (2005), 'Activity-Based Costing', Management and Cost Accounting (Prentice Hall Europe), 345-363

This article discusses how a management accounting system like activity-based costing (ABC) may or may not have a significant impact on a firm’s value. With the samples that are shown, it is proven that the companies that use an ABC technique outperform other companies that don’t use an ABC technique by 27% over a three year period. It also shows that using an ABC technique will add value to the firm through better cost control and asset utilization. Because it had never really been proven that an ABC process really does bring an increase in shareholder value through increased profits, it is being

Topics 1. Debt investments. (a) Held-for-collection. (b) Trading. 2. Bond amortization. 3. Equity investments. (a) Non-trading. (b) Trading. Questions 1, 2, 3, 13 4, 5, 6, 8, 11, 13 2, 4, 7, 8, 9, 22 6, 7 1, 12, 17 16, 22 8, 9, 14, 15, 16, 22 17, 18, 19, 20, 21 22 10, 11, 25 23, 27 24 29 30, 31, 32, 33, 34, 35, 36, 37 5 10 11 12 21 22, 23, 24, 25, 26, 27 12 13, 14, 15, 16, 17, 18 7, 8 6 1, 3, 10 2, 4 1, 2, 3 Brief Exercises Exercises 1 2, 3, 4 5 3, 4, 5 1 8, 10, 11 8, 9, 11, 12, 13, 15, 16, 17 13, 14, 17, 18 10, 11 6, 7 19, 20 5, 6, 8, 9, 10, 12 1, 2, 7 1, 3, 4, 7 1, 2 4, 7 3 Problems Concepts for

By: Charn Gek Cheng, Chiang Soo Ling, Kummar Sokali Muthu Mogan, Lee Siew Fen Samantha

* May refer to Balance Sheet on company position and Income Statement on company performance.