Question

describe how assigning overhead costs differ under a simple activity based product costing system from a...

describe how assigning overhead costs differ under a simple activity based product costing system from a conventional volume-based costing system?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

In case of volume based costing, costs are allocated on bases of single cost driver which could be number of labour hours and all the overhead costs are allocated based on the labour hours utilized. Traditional volume based costing is preferred when the overheads of the company are relatively low as compared to direct costs.

While in case of Activity Based Costing (ABC), overheads are allocated based on different set of cost drivers such as ordering cost is allocated based on number of purchase orders, maintenance of machinery is allocated based on machine hours, setting up cost is allocated based on number of production runs etc.,. ABC costing is preferred when the overheads are relatively more when compared to direct costs.

The decision to choose between which method of costing to use depends on the management. One can get more accurate Cost data by using ABC method.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Name: ________________________________________ How does Activity Based Costing differ from the traditional overhead allocation system? _______________________________________________________________________________________________________________________
Name: ________________________________________ How does Activity Based Costing differ from the traditional overhead allocation system? __________________________________________________________________________________________________________________________________________________________________________ Quality Management: Type of Quality Cost Voluntary or Failure? Type? Downtime Reliability testing Warranty Product design Training costs Scrap Customer relations Inventory inspection Downtime Re-inspection Repair and rework Identify 3 products that would use Job order costing: (1)_____________________________________________ (2) _____________________________________________ (3)_____________________________________________ Identify 3 products that would use process costing: 1)_____________________________________________ (2) _____________________________________________ (3)_____________________________________________
Under activity-based costing, unit-, batch-, and product-level manufacturing overhead costs are A : excluded from estimates...
Under activity-based costing, unit-, batch-, and product-level manufacturing overhead costs are A : excluded from estimates of product cost.   B : excluded from inventory costing. C : included in selling and administrative costs. D : included in estimates of product cost.
Consider a situation where an activity-based costing system is in use rather than a conventional volume-based...
Consider a situation where an activity-based costing system is in use rather than a conventional volume-based costing system. Which of the following statements is/are true? The use of activity-based costing eliminates the need to consider qualitative factors. When an activity-based costing system is used, facility level costs will have to be analysed differently to the way they would be under a traditional volume-based costing system. When an activity-based costing system is used, unit level costs will have to be analysed...
Desjarlais Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Desjarlais Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Activity Cost Pools Activity Rate Setting up batches $ 81.90 per batch Assembling products $ 0.63 per assembly hour Processing customer orders $ 50.91 per customer order     Data concerning two products appear below: Product S96U Product Q06F Number of batches 35 52 Number of assembly hours 106 861 Number of customer orders 18 41 Required: a. How much overhead cost would be...
Manton Corporation uses an activity based costing system to assign overhead costs to products. In the...
Manton Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs—equipment expense and indirect labor—are allocated to the three activity cost pools—Processing, Supervising, and Other—based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment expense $ 38,000 Indirect labor $ 6,600 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Processing Supervising Other Equipment expense 0.60 0.20 0.20 Indirect labor 0.10 0.30 0.60 In...
Mouret Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Mouret Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Activity Cost Pools Activity Rate Setting up batches $ 82.26 per batch Processing customer orders $ 62.90 per customer order Assembling products $ 1.78 per assembly hour Last year, Product N79A required 32 batches, 1 customer orders, and 367 assembly hours. Required: How much overhead cost would be assigned to Product N79A using the company's activity-based costing system? (Do not round your intermediate...
Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been...
Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $51,200; Supervising, $31,400; and Other, $24,000. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing) Batches (Supervising) Product O6 15,000 1,490 Product...
ABC Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
ABC Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Machining, Order Filling, and Other. The costs in those activity cost pools appear below: Machining $ 15,800 Order Filling $ 6,400 Other $ 9,800 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products....
An improvement to the use of a predetermined overhead rate for assigning overhead costs to manufactured...
An improvement to the use of a predetermined overhead rate for assigning overhead costs to manufactured products is: Group of answer choices activity-based costing process costing absorption costing job order costing
Which of the following statements is TRUE ? Answers: a. An activity-based costing system costs about...
Which of the following statements is TRUE ? Answers: a. An activity-based costing system costs about the same amount as a traditional job-order costing system. b. None of the other statements is true. c. Activity-based costing systems allocate overhead costs directly from cost sources (e.g. factory lease cost, supervisor salary cost, etc.) to product units based on activity rates. d. All else being equal, activity-based costing is more likely to be profitable when the firm has fewer SG&A costs.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT