Case Study Activity Based Costing - amazonia.fiocruz.br

Case Study Activity Based Costing - useful message

All information required for this assignment is provided in the Unit 2 Student Workbook [Excel] for this unit. Chandler Corporation is currently producing several products, including both custom and standard designs. It has received requests for two new products: swimming pool shades and landscape trellises. It is considering whether to produce either or both of these products. Based on the projections in Exhibits 1 to 3 describing the current capacity and required capacity needs for the new products, complete the following requirements:. In a page report, based on your quantitative analysis, discuss the results of what your quantitative analysis means for Chandler. Explain your answer. Support your recommendation with a minimum of 3 academic resources. FAQ Pricing Testimonials. Instructions All information required for this assignment is provided in the Unit 2 Student Workbook [Excel] for this unit. Case Study Activity Based Costing

Activity-based costing is an information system, that assigning resource of cost to products or services based on the activity consume. The Economist, June 29thActivity-Based costing Thus, ABC can help the manager to obtain more accurate and up-to-date costing information to evaluate the cost budgeting to maximize profit. In order to allow identify the products and prevent inefficient or unnecessary activities for cost reduction and enter in the wrong marketplace.

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TurneyPp. ABC system follows two stages to identify the cost. Firstly, is accumulates manufacturing overhead costs for each activity consume; Secondly, identifying the resources and activities consume and then assigning the costs to the products, services and customers. This is dissatisfied whereas two systems which are absorbed the same costs but can use very different amount of overhead. Hence, for a company using TCA system that make and more and more variety products would lead to large losses.

Assignment Resource(s)

It is a well know that the Traditional cost accounting TCA is a systems usually assigns costs based on single volume to measures such as labour hour, machine hour and etc. It is arbitrarily assigning manufacturing costs overhead to units produced only to product. It is an allocate manufacturing costs directly to products or services such as direct labour hours, direct labour Acfivity or machine hours. But TCA is fails in assigning non-manufacturing costs such as administrative expenses because it is not absorbed in to products or services.

Therefore, ABC system is more appropriate to adopt it can help the manager to analysis more accurate cost management than TCA system.

ABC can provide reliable information in calculation product costs and is best practice for products and service profitability analysis. When overhead is high, diversify products, therefore cost Costijg determine cost of mistake high and competitive is stiff thus ABC is able to calculate the precise cost of product compare with TCA. ABC system is help to evaluate performance and set budget which can assist the manager to use this information to control and comparison purpose.

To prevent over budget situation and overcome unpredictable occur. ABC can help the management to Case Study Activity Based Costing clear picture of the objective to guide the company toward given target.

For the TCA system is determining the cost of production after the produces. ABC can provide more precise information in determine cost of product and control the quality of the products to prevent sacrificing by competitor. In the advance manufacturing, many companies adopt ABC system because its can provide more advantageous offer so that can reduce misrepresentation in product costs.

Advantages & Disadvantages

ABC can provide more logical, relevance and accurate information to assist company calculation more precise cost of product and evaluation the performance, leading to increase profitability measurement. For the accurate measurement of ABC that can help managers more effective at decision making. Therefore, a better decision can improve the management strategic and tactical planning effectively, detect changes in unpredictable and allows managers to detect mistake become crucial.

To be profitability, a company must calculate its product costs in order to make its pricing decision. Therefore, ABC system is an effective product costing system more appropriate to adopt.]