what this difference means for the Bank’s business strategy. Finally, you will consider how the Bank’s managers can use the new, more refined activity-based cost…
The main difference between activity based costing and the traditional system is that activity based costing requires four steps to build its cost point. Traditional costing uses one rate where first, activity based costing must identify each activity and estimate its total and indirect cost. Second for activity based costing is that the cost driver for each activity must be estimated along with the total quantity of each driver’s allocation base. Third the cost allocation for each activity must be computed. Fourth costs to cost object are allocated. Activity-based costing focuses on activities. The costs of those activities become the building blocks for measuring (allocating) the costs of products and services. (Horngren, Harrison, Jr & Oliver, 2008) This method of costing does require more time to compute the cost to the activity yet it earns that money back plus dividends by having a more accurate forecast of the true costs that are associated with each activity.…
Activity Based Costing is a costing tool that corporations use to identify costs that are associated with the production of an item. CarryAll Company produces specialtyand standard briefcases. This company has not adopted ABC. Therefore, by not using ABC, the president believes that the producing specialty briefcases are both beneficial for the company and the president, but this is not true. Without using ABC, CarryAll only applies direct and indirect costs. The president was concerned with standard cases showing a loss while specialty was showing a profit. The company will see an overall higher profit by using ABC by $.25. (18250-18225)…
Activity-based costing changes “the rules of the game” since it changes some of the key measures that manager’s use for their decision making and for evaluating individuals’ performance (Accounting4management.com). In order for Glaser to implement a successful activity-based costing system management must take a look at their overhead costs and justify whether or not they have enough overhead to be worrying about. While we do not know Glaser’s monetary value of their overhead costs, it seems that they have several divisions with a large amount of cost categories management must consider. The three main divisions of Glaser Health Products are Operations, Sales, and Administrative. Under each division are costs categories that have been divided up to help management determine where they belong. (Appendix A identifies each of the costs with the appropriate division).…
One advantage of Activity-Based Costing system is it has more accurate overhead cost allocation because there are more cost pools, the costs in each pool are more similar, and allocation is based on activities that cause overhead costs. It is more effective overhead cost control by focusing on processes or activities and focuses on relevant factors by assigning costs to any cost object that is of interest to management. Lastly, it allows better management of activities by helping managers identify the causes of costs and the activities driving them. The disadvantages of Activity-Based Costing are its cost to implement and maintain ABC requires management commitment and financial resources and its uncertainty with decisions remain and management must interpret ABC data with caution in making managerial decisions.…
Provide a brief analysis of the attached (page 2 of this document) activity-based costing system. Do you agree with the activities and/or cost drivers identified for each activity? Why or why not?…
This exercise is to help further explain Activity Based Costing and how it can help the Manufacturing Company keep its cost at the correct level. “An Activity Based Costing system recognizes relationships between cost, activities, and products, and through this relationship assigns indirect cost to products less arbitrarily than traditional methods...” (Investopedia, 2014)…
To access the case study you must follow the link provided in the Major Case Study item (under Assessment) in your course blackboard website. To assist you with this case study an additional reading, Time-Driven Activity Based Costing by Robert Kaplan will also be provided under this link. This is an extension of the earlier version of ABC that we have considered and provides you with background to the method used by Elkay. Students are also encouraged to read more broadly on the problems and issues in the case (e.g., on customer profitability).…
References: Michael H. Granof, David E. Plat, Igor Vaysman. (2000). Using Activity-Based Costing to Manage More Effectively. http://costkiller.net/tribune/Tribu-PDF/Using-Activity-BasedCosting-to-Manage-More-Effectively.pdf Rockford Consulting, retrieved March 21, 2011, from http://rockfordconsulting.com/activitybased-costing%20(ABC).htm Value based management, retrievd March 21, 2011, from http://www.valuebasedmanagement.net/methods_abc.html Dakota Products Case Office Analysis Course: BUSA 5061 Managerial Accounting Students Name: Teresa Willette Professors Name: Dr. Conner/Dr. Pollard Date 3/20/2011 Executive Summary The following analysis is written for Dakota Office Products to evaluate current business operations and recommend future actions necessary to ensure company success. In the analysis of the company we will identify inefficient business practices that have led to the companies first profit loss in its history. We will evaluate the companys current pricing structure, ordering methods, shipping and delivery process, and deficiencies in cash flows. For Dakota Office Products (DOP), its existing costing system was inadequate because it is incapable of accounting for even all of the known costs such as the desktop delivery service as well as hidden costs such as the ten percent DOP paid to maintain its working capital line of credit for accounts receivable. Using the Activity Based Costing(ABC) methodology can be utilized to also improve processes and identify opportunities to improve business effectiveness and efficiency by determining the true or real costs of a given product or service. ABC principles are used to focus management 's attention on the total cost to produce a product or service, and as a basis for full cost recovery of a production or service process. Background Information The company under the study, Dakota Office Products, is an established and reputed player under this segment.…
Our Shared services models enable cost transparency for multi-functional and reciprocal services rendered by Shared Services units. Cost transparency in context of Shared Services is to show the Business…
“LAW AS AN INSTRUMENT OF INDUSTRY’S INTERFACE WITH PROSPERITY-MERGER AND TAKE OVER CODES IN INDIA”…
A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. Co-operative banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking accounts…). Co-operative banks differ from stockholder banks by their organization, their goals, their values and their governance. In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking regulations, which put them at a level playing field with stockholder banks. Depending on countries, this control and supervision can be implemented directly by state entities or delegated to a co-operative federation or central body.…
The robust macroeconomic environment continued to underpin the financial performance of Indian banks during 2004-05, with major bank groups successfully weathering the impact of an upturn in interest cycle. The demand for credit was broad-based during 2004-05 with agriculture and industry joining the housing and retail sectors to drive up the demand for credit. A sharp increase in net interest income mitigated to a large extent the impact of a sharp decline in non-interest income mainly on account of decline in trading profits. Banks continued to earn sizeable profits albeit somewhat lower than last year. Asset quality of scheduled commercial banks improved further during 2004-05. Capital base of banks kept pace with the sharp increase in risk-weighted assets.…
ASSISTANT PROFESSOR CAREER GIRLS DEGREE COLLEGE LUCKNOW UP; Abstract - Urban co-operative banks ranked a very significant position in the Indian banking sector. Competent management is prerequisite for the success of any organization. At present highly competitive and globalized business environment, there is an urgent need of professional management for the successful controlling and managing the affairs of the urban co-operative banks. Increasing political hindrance in co-operatives has also affected the strong growth of the cooperative organization. In order to make the management of these banks professional and managing the affairs of these banks on scientific lines, there are several institutions which are directly or indirectly connected involved in imparting education and training to all levels of management. It is hoped that the State Governments will not delay acceptance of the recommendations made by the RBI. In view of the financial sector reforms and de-regulation, Urban Co-operative Banking Sector should be right away freed from restrictive provisions of co-operative Acts so as to make them self- reliant and self- supporting. The purpose of this paper examines the growth and success of the urban cooperative banks through statistical analysis. Key words - significant, urgent, imparting, restriction.…
International Journal of Economic Practices and Theories, Vol. 1, No. 2, 2011 (October), e-ISSN 2247 – 7225…