Refer to Accounting Test Question No.1
(a) Computation of the activity based costs and profits for each contract.
Step 1:Compute cost per unit of cost driver
= Cost pool / cost driver volume
Activity
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Company XYZ has 2 fixed price contract for 2 different customers.The company has enough capacity for both contracts but is uncertain whether they will be profitable. Data as follows: Customer AAA
Unlike other traditional costing systems,one of the importance of activity based costing is to determine the “true” cost for a cost object which is a product,service or customer Why is then the necessity to know the “true” cost of a product? Some of the reasons includes the following: To identify [...] Some managers or readers who are assigned to build up an activity based costing system might be at a loss on how to even embark on this assignment.To do it,please look at the earlier articles on steps,conditions,factors,etc are provided. In this article,the overview approach is given to implement the activity [...] As managers,we always try to relate the overheads costs by APPORTIONING to the various cost centres. Remember that activity based costing is basically a ” one-step attribution system” as costs are NOT APPORTIONED between activities-the costs of each activity are RELATED DIRECTLY to products. Cost attribution is the process of relating cost to [...] |  FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four,Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.Also author to another very popular free educational accounting cum finance blog:http://basiccollegeaccounting.com under the branding of College Accounting Coach. | |||||
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