Activity Based Costing 13

2273 WordsDec 13, 201010 Pages
Running head: ACTIVITY BASED COSTING CASE Activity Based Costing Case David Welch University of Phoenix Accounting Capstone ACC/594 Tom Myers February 1, 2010 The selection of the right cost calculation method is of critical importance when it comes to determining the real product profitability. Activity Based Costing is one approach that can be used. Activity based costing is a managerial accounting system that determines the cost of activities without distortion and provides management with relevant and timely information (Dunn, 2009). This paper will briefly summarize Colombo’s competitive environment and General Mills strategy in response to that environment, using the ABC analysis, Team A will determine new segment…show more content…
(To be compared with the traditional cost allocation). Actual Use of Total Cost Drivers per Product Activity Cost Pools SG&A Cost Drivers Impulse Yogurt Cost Drivers Costs Per Activity Segment Shops Selling Time to Yogurt % Time 1,185,000.00 100% 99% 1% Activity Cost Pools SG&A Cost Drivers ABC Cost Costs Per Activity Per Selling Time Selling Time to Yogurt 1,185,000.00 100% 1185000 Cost Drivers per Segment: Activity Cost Pools Impulse ABC Cost Yogurt Shops ABC Cost Segment % per Selling time Cost Assigned Segment per Selling time Cost Assigned Total Selling Time to Yogurt 99% 1185000 1,173,150.00 1% 1185000 11,850.00 1,185,000.00 As shown in the previous Exhibit 1, the company recorded for cost of goods sold (COGS) $3,000,000 of Pick/Pack shipping costs during the year. Under this Pick/Pack shipping activity the company is recognizing

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