Activity Based Costing vs. Traditional Costing - What are the three reasons why the reported product...
Activity Based Costing vs. Traditional Costing - What are the three reasons why the reported product margins for the two costing systems differ from one another?
Homework Answers
These are the process of allocating various indirect costs to products.
Three reasons are as below:
No.1) Non-manufacturing costs (like administrative cost, selling cost, etc.) are considered in Activity Based costing (ABC); but these are not considered in Traditional costing. More costs means less-margin, which is observed in ABC.
No.2) Overhead per-unit is different in both these cases – ABC uses units of production; but Traditional costing uses some other factor (like direct labor hour). This makes different amount of allocation and different margins.
No.3) ABC considers each and every activity separately (it makes more details analysis). Traditional approach is not like that – it considers as a whole; therefore, there are differences of figures and margins.
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Activity Based Costing vs. Traditional Costing - What are the
three reasons why the reported product...
What are the key reasons for product cost differences between traditional costing systems and Activity-Based Costing...
What are the key reasons for product cost differences between traditional costing systems and Activity-Based Costing ABC systems?
What are the reasons that cause the difference in products costs by using activity-based costing and...
What are the reasons that cause the difference in products costs by using activity-based costing and traditional methods? And why product/services will be under-cost or over-cost?
Which allocation base is preferable under traditional costing and why? Which costing system (traditional or activity-based)...
Which allocation base is preferable under traditional costing and why? Which costing system (traditional or activity-based) is preferable in pricing decisions and why?
Walsh Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Walsh Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment expense and indirect labor-to three activity cost pools-Processing, Supervising, and Other-based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment expense $ 55,000 Indirect labor $ 7,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Processing Supervising Other Equipment expense 0.10 0.70 0.20 Indirect labor 0.50 0.10 0.40 Finally, sales and direct...
Q1. How does the activity-based costing differ from the traditional approach? What is the underlying difference...
Q1. How does the activity-based costing differ from the traditional approach? What is the underlying difference in the philosophy of each of them'?
PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 07-L07-3, 1107-4 107-5 Smoky Mountain Cerpen makes two...
PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 07-L07-3, 1107-4 107-5 Smoky Mountain Cerpen makes two types of biking both Xtreme and the Pind Detector les appear Xentre Pune Selling price per $140.00 $99.00 Direct mails per 72.00 $55.00 Direct labore $24.00 Duet abbons per 20 DLH 1. DIE Estimated products and a 20.000 30.000 $12.00 The company has a total costing systems in which manufacturing overheadsed to directores De Coming vechead and direct laborhoors for the below Estimated to...
E connect ACCOUNTING et Margins [L01, LO3, L04, L05] PROBLEM 7-17 Comparing Traditional and Activity-Based Product...
E connect ACCOUNTING et Margins [L01, LO3, L04, L05] PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins (LOL Hi-Tek Manufacturing Inc. makes two types of industrial component parts T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek Manufacturing Inc. Income Statement Sales ....... Cost of goods sold .... Gross margin ....... Selling and administrative expenses . . . . . . $2,100,000 1,600,000 500,000 550,000 $ (50,000 Net operating loss........ Activity-Based Costing: A Tool...
Exercise 2A-3 Activity-Based Absorption Costing as an Alternative to Traditional Product Costing (LO2- 5) Stillicum Corporation...
Exercise 2A-3 Activity-Based Absorption Costing as an Alternative to Traditional Product Costing (LO2- 5) Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production $ 56.00 $ 14.00 0.70 DLHS 10,000 units Standard $ 44.00 $ 11.60 1.40 DLHS 50,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct...
Thanks for the help and your time! Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1,...
Thanks for the help and your time!
Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5) Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder Data concerning these two product lines appear below: Fathunder $ 91.00 Selling price per unit Direct materiale per unit Direct labor per unit Direct laber-hours per unit Estimated annual production and wales $126.00 63.20 $31.70 1.3 DLHE 21,000 units $ 9.00 2.0 DLHS 75,000 units The company has...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $ 110,000 Supervisory expense $ 6,900 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.40 0.30 0.30 Supervisory expense 0.40 0.20 0.40 In the...
Q1. How does the activity-based costing differ from the traditional approach? What is the underlying difference in the philosophy of each of them'?
PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 07-L07-3, 1107-4 107-5 Smoky Mountain Cerpen makes two types of biking both Xtreme and the Pind Detector les appear Xentre Pune Selling price per $140.00 $99.00 Direct mails per 72.00 $55.00 Direct labore $24.00 Duet abbons per 20 DLH 1. DIE Estimated products and a 20.000 30.000 $12.00 The company has a total costing systems in which manufacturing overheadsed to directores De Coming vechead and direct laborhoors for the below Estimated to...
E connect ACCOUNTING et Margins [L01, LO3, L04, L05] PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins (LOL Hi-Tek Manufacturing Inc. makes two types of industrial component parts T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek Manufacturing Inc. Income Statement Sales ....... Cost of goods sold .... Gross margin ....... Selling and administrative expenses . . . . . . $2,100,000 1,600,000 500,000 550,000 $ (50,000 Net operating loss........ Activity-Based Costing: A Tool...
Exercise 2A-3 Activity-Based Absorption Costing as an Alternative to Traditional Product Costing (LO2- 5) Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production $ 56.00 $ 14.00 0.70 DLHS 10,000 units Standard $ 44.00 $ 11.60 1.40 DLHS 50,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct...
Thanks for the help and your time!
Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5) Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder Data concerning these two product lines appear below: Fathunder $ 91.00 Selling price per unit Direct materiale per unit Direct labor per unit Direct laber-hours per unit Estimated annual production and wales $126.00 63.20 $31.70 1.3 DLHE 21,000 units $ 9.00 2.0 DLHS 75,000 units The company has...
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