abc costing
NAME SIBONGILE MOREBLESSING
NAME HEAVENS
SURNAME MAPIYO
STUDENT NUMBER P0128855B
PROGRAMME BUSINESS MANAGEMENT
COURSE ACCOUNTING 2B
COURSE CODE CAC 2206
LECTURER MR D MADZIVANYATI
DUE DATE 07 FEBRUARY 2014
1(a)
TRADITIONAL ARBSORPTION COSTING STATEMENT
DETAILS COST PER SYSTEM
Systems Mist cooling Water mist
OAR
$1500/hrs
Variable cost $ 1 450,00 $ 1 254,00
Fixed Overhead cost $ 4 500,00 $ 5 400,00
Total unit cost $ 5 950,00 $ 6 654,00
Traditional Absorption Costing Income Statement per unit
Mist cooling Water cooling
Total
Selling Price [ unit cost X (1+0.10)]
$ 6 545,00 $ 7 319,40 $ 13 864,40
Unit cost
$ 5 950,00 $ 6 654,00 $ 12 604,00
Gross profit
$ 595,00 $ 665,40 $ 1 260,40
(b) ABC is an approach to costing that identifies individual activities as fundamental cost objects. It uses the cost of the activities as the basis for assigning costs to ultimate cost objects such as product or service. It also involves monitoring of activities which involves tracing resource consumption and costing of final outputs and it also uses some cost drivers as absorption basis. A cost driver is any factor that causes a change in the cost of an activity.
Benefits put forward for activity based costing is that
NAME HEAVENS
SURNAME MAPIYO
STUDENT NUMBER P0128855B
PROGRAMME BUSINESS MANAGEMENT
COURSE ACCOUNTING 2B
COURSE CODE CAC 2206
LECTURER MR D MADZIVANYATI
DUE DATE 07 FEBRUARY 2014
1(a)
TRADITIONAL ARBSORPTION COSTING STATEMENT
DETAILS COST PER SYSTEM
Systems Mist cooling Water mist
OAR
$1500/hrs
Variable cost $ 1 450,00 $ 1 254,00
Fixed Overhead cost $ 4 500,00 $ 5 400,00
Total unit cost $ 5 950,00 $ 6 654,00
Traditional Absorption Costing Income Statement per unit
Mist cooling Water cooling
Total
Selling Price [ unit cost X (1+0.10)]
$ 6 545,00 $ 7 319,40 $ 13 864,40
Unit cost
$ 5 950,00 $ 6 654,00 $ 12 604,00
Gross profit
$ 595,00 $ 665,40 $ 1 260,40
(b) ABC is an approach to costing that identifies individual activities as fundamental cost objects. It uses the cost of the activities as the basis for assigning costs to ultimate cost objects such as product or service. It also involves monitoring of activities which involves tracing resource consumption and costing of final outputs and it also uses some cost drivers as absorption basis. A cost driver is any factor that causes a change in the cost of an activity.
Benefits put forward for activity based costing is that
Bibliography: Charles T Horngen & Allan George Foster; Cost Accounting; 6th Edition; Prentice Hall Frank Wood & Allan Sangster;2008; 11th Edition; Prentice Hall