activity-based costing method is very different from the existing standard unit costs and the revised unit costs. Exhibit 3 uses the traditional cost allocation system‚ which allocates all costs based on measures of volume. In the standard unit costs‚ Destin Brass uses direct labor as the only cost driver‚ which rarely meets the cause-effect standard wanted in cost allocation. Exhibit 4 is similar to exhibit 3‚ but instead‚ 4 uses materials and machine hours as the cost driver instead of just direct labor. The
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NUMBER – 0858 (ELM) EXPERIENTIAL LEARNING METHODOLOGY LEARNINGS Role allocation Taking initiative UNDERSTANDING Roll allocation is done in order to achieve a common goal and in agreement & in accordance of every member’s strength. Team leaders/Supervisors on the ground level needs to implement and execute the process which requires taking initiative. Overall allocation needs understanding his team at the Managerial level and staff level initiative to
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estimate costs‚ the company recently adopted an activity-based costing system. Last year‚ the company incurred $300‚000 in overhead costs. Based on an intense study of their company‚ the following activities‚ allocation bases‚ and percentages of overhead costs were determined: Activity | Allocation Base | Proportion of Overhead Cost | Purchasing | Number of purchase orders | 25% | Materials processing | Number of square feet | 50% | Sales | Number of sales orders | 25% | The number of activities
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production processes to use? 9. What actions are being stimulated by the ABC Analysis? 10. Comment on the development‚ implementation‚ and acceptance of the ABC approach.1. Current Situation The existing system at ETO‚ the labor-based burden allocation process‚ has become obsolescent since (a) an increased dependence on vendor certification‚ accordingly steadily declined direct labor hours‚ (b) a change from simple inspection services to broader-based test technology‚ (c) the introduction of high-technology
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concerned‚ we are transferring to match any excess demand from US to Europe‚ or vice versa‚ to immediately meet for any shortfalls in the future‚ even before they happen‚ provided there is stock available from the place being shipped. Furthermore‚ the allocation of the units is also based on the demand received in the previous periods. If the demand in the previous period is excess in Europe‚ more units will be allocated to Europe to avoid any lost sales‚ (the same holds true for any excess demand in US)
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line‚ modular line or section‚ a line set with online finishing and packing. A line includes multiple work stations with varied work contents. Production per hour is varied depending on work content (standard minutes of particular task/operation)‚ allocation of total manpower to a particular operation‚ operator skill level and machine capacity. Operation with lowest production per hour is called as bottleneck operation for that line. A bottleneck operation in a line determines the output of the
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squeeze on the budget for new infrastructure – will take up 100% in 5 years 30% of the budget is for fixing errors‚ which is too high Unequal distribution of IT budget Fred’s really fat Harriet and Brenda really thin Lack of outreach due to under allocation of budget New IT initiatives are implemented in silos/haphazardly resulting in a spaghetti architecture No established process in simplifying and integrating them better to current IT infrastructure 30% is used to do patchwork to integrate new
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because the days of data collection is directly related to the project salaries‚ which is the cost driver for the allocation of overhead. Large Projects 600 days/20 projects = 30 days per project Small Projects 3600 days/100 projects = 36 days per project 2. $640‚000/160 trips = $4000 per trip $370‚000/4200 days = $88.095 per day $390‚000/1300 pages = $300 per page Overhead Allocation Largest 20 Projects Smallest 100 Projects Survey Proposed and Design 50 trips x $4000 per trip = $200‚000 110
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Topic 6: Management Accounting and Cost Case: Shelter Partnership a. My main learning outcomes from Topic 6 and the Case Study; 1) Firstly‚ I realize management accounting has much to offer. Somehow I can handle physics but not accounting. Now thanks to this course I can appreciate and make sense of it. The bit that really caught my attention was seeing how management accounting can be really useful for business planning‚ cost management‚ budgeting and performance measurement. It offers
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Cost allocation for indirect costs Cost Pool – Set of costs that are added together before being allocated to cost objects on some common basis Cost Driver/ Allocation base Cost Object Cost Driver Rate = Total Costs in Pool/ Total Quantity of Driver Where total quantity of driver = practical capacity of driver Cost of excess capacity = Cost Driver Rate * Excess capacity Predetermined overhead rate - cost per unit of the allocation base used to charge overhead to products. Predetermined
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