Karteikarten
Week 3
Karten in diesem Stapel (34)
- 1Problems with CPC (conventional product costing)Non manufacturing costs are not assigned
Cant adapt to changing environment
Innacurate product costs - 2Traditional Costing systemVolume driven allocation drivers e.g machine or labour hours
- 3Functional based costing plantwide rateSIngle rate
- 4Functional Based costing departmentssingle rate for each department
- 5Plantwide rate Step 1
- 6Step 2
- 7Step 3
- 8Step 4
- 9Department rate step 1
- 10Step 2
- 11Step 3
- 12The problem of conventional costingHigh volume (more produced) – over cost (to high)
Low volume (less produced) – under cost (to low) - 131. Manufacturing overhead costs can be referred to as:factory burden costs. (can include depreication etc thus why not D)
- 142. . Any activity or factor that causes a cost to be incurred is known as a:cost driver.
- 153. Which of the following approaches combines all the manufacturing overhead costs into a single cost pool?Plantwide rate
- 164. In which of the following may a traditional costing system result?The product costs are distorted.
B. Complex products are under-costed.
C. Simple products are over-costed. - 175. One of the results of the inaccuracies arising from traditional costing systems may be:overhead costs are underapplied AND actual overheads exceed overhead applied.
- 18Limitations of Traditional Costing SystemIgnores volume related support activities
Assumes products consume all resources
Inapproriate where organisations produce a wide range of products - 19ABCA methodology that can be used to measure costs for cost objects (products) and the performance of related activities
- 20ActivityA unit of work performed within the organisation (any work in organisation, if there is activity there is cost)
- 21Cost driverA factor or activity that causes a cost to be incurred
e.g. electricity = hours - 22Activity driverA cost driver used to estimate the cost of an activity consumed by the cost object (e.g., product) e.g. electricity = hours COST DRIVER KW/h would be an activity driver
- 23Resource driverA cost driver used to estimate the cost of resources consumed by an activity
- 24Root cause cost driverThe underlying factors that cause activities to be performed and their costs to be incurred
The - 25Under an ABC system, costs are assigned to products based onindividual products’ consumption or demand for each activity.
- 26ABC Step 1
- 27Step 2
- 28Step 3
- 29Approaches to ABCSimple approach: allocates manufacturing overhead costs to products
ABC system for indirect costs: allocates manufacturing overhead costs and non-manufacturing costs to products
Comprehensive ABC system: allocates all product-related costs (except direct material and direct labour) to products and for activity management - 30A simple approach to ABCStep one: -measure the cost of manufacturing overhead activities
-Identify major manufacturing overhead activities
-Determine total (budgeted) cost of each activity
Step two: -assign cost of manufacturing overheads activities to products
-Select suitable activity drivers for each activity
-Estimate cost per unit of activity driver
-Assign manufacturing cost to products based on the quantity of activity drivers consumed - 31Hierarchy of activities for ABCUnit level activities: Performed for each unit of product
Batch level activities : Performed for each batch of product
Product level (or product-sustaining) activities: Performed for specific products or product families
Facility level (or facility-sustaining) activities: Required to support the business as a whole, not caused by any particular product, so not usually included in the product cost - 32Activity-based vs conventional product costs-Conventional product costing assumes product costs are driven by volume-based cost drivers. Assumes they are all unit level costs
-Conventional costing ignores batch size as a cost driver. Units produced in large batches consume a relatively low cost per unit of batch costs
-Conventional product costs do not include non-manufacturing costs. ABC product costs may include product-related non-manufacturing costs - 33When to use ABC- OH costs are signgiant portion
- Diverse product range
- Diverse Batch sizes - 34Limitations of activity-based costing- Complexity
- Cost of adapting
- More extensive and detalied analysis
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- Mid Sem Strat Karteikarten am Week 3, erstellt von Nicholas Rossi am 24/04/2016.
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- Nicholas Rossi
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