Answer To: HI5017 MANAGERIAL ACCOUNTING INDIVIDUAL ASSIGNMENT T2 2020 HOLMES INSTITUTE FACULTY OF HIGHER...
Sarabjeet answered on Sep 06 2021
ABC
ABC
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Contents
Part- A 3
Answer1 3
Answer 2 4
Answer 3 5
Part- B 8
Answer 1 8
Answer 2 10
Answer 3 11
Answer 4 11
References 12
Part- A
Answer1
• Activity-based cost calculation is a two-level product cost calculation method. The method first allocates costs to activities, or then allocates them to goods deped on the consumption of each activity (CGMA, 2011).
• The cost pool in the two-level approach now accumulates activity-associated costs
• Activity-based cost calculation is depending on the following concepts: products customer activities, moreover activities use resources
In 1988, Cooper and Kaplan promoted an activity-based costing (ABC) system to overcome the barriers of traditional costing systems and the cost allocation problem of "peanut butter spread". Bragg, (2017) found that the recognition and development of ABC was stimulated by Cooper and Kaplan, and was persuaded to a large extent, particularly in manufacturing. People think that this is a solution to the organization's management accounting needs. It is also said that activity-based costing is the most important management accounting development. Indeed, some people describe it as a panacea for solving various problems. While then, ABC has played an important role as a management tool and has become popular among academicians, practitioners and the industry.
ABC was originally designed by George Staubus of the United States in the 1980s. ABC is promoted as a system that can decrease the arbitrary cost allocation level associated with traditional cost accounting systems and lead to more accurate product costs. Most of the authors often describe ABC as an easy but influential word that is correct. The accuracy of product costing is critical, especially in decision-making and reducing the organization's cost reduction as well as profitability purposes.
Chisambara, (2012) pointed out that the ultimate goal of ABC as a cost-sharing system is to track the production costs incurred in the production of goods or services, and to track the activities as accurately as possible. ABC is not only the basis for calculating accurate product costs, but also plays a vital role in the management of management costs.
Answer 2
RMS company and ALS limited are the organizations are been chosen by me which uses ACTIVITY BASED COSTING:
Experienced business visionaries emphasize that in order to gain a place in a demanding market, you need to continue to look for arrangements. In today's business, executives are in a dynamic and evolving state, and therefore require a wide range of talents. This means you need to search for current tools to help you achieve better results. In addition, if you do not focus on cost checks, it is difficult to expect better results (Das, 2020). When the complex assembly form makes cost bookkeeping lack of dynamic data sources, it is a wise idea to choose activity-based costing (ABC). This idea is different from calculating unit cost. It is closely related to the cost of checking association procedures and exercises. The basic task of the model is to provide reliable data from various fields, such as creation or transaction, based on project collection, customer collection or provider collection (Anderson and Kaplan, 2004).
Activity Based Costing
In this strategy, various cost drivers are used to allocate rebates to various projects. ABC counting depends on practice or basic procedure. The basic suspicion of the tool used to measure the unit cost is to allocate expenditures to the responsible community and specific programs. For example, the basic assumption of ABC is that the circuit returns expenditures from the activities performed by the association, thus making the project (Das, 2020). The roundabout fee is expressed in a simple way, just like the conventional full cost accounting and variable cost accounting, because they will be distributed to the project based on the accounting report. This strategy is a powerful and effective dynamic key tool. Therefore, activity-based costing is applicable to this RMS and ALS (research and manufacturing company) (Das, 2020). Activity-based costing is an IS that allocates cost resources for services or products depend on activity consumption. Therefore, ABC can help managers get more correct and update information of costing to evaluate the cost budgets to increase profits. In addition, ABC can also provide companies with accurate cost information to make better business performance (CGMA, 2011). To enable product identification as well as prevent unnecessary or inefficient activities to reduce costs and enter incorrect market. Since the 1980s, ABC has become the most famous or well known. This is because the traditional costing method is less and less relevant to the distribution cost, and it has increased its impact on the British Robin Cooper and the Americans.
Answer 3
ABC system determines the cost in two stages. The first is to accumulate the manufacturing overhead consumed by each activity; the second is to determine the resource and activity consumption, and then allocate the expenses to goods, services and consumer. ABC is an option to traditional cost accounting. In traditional cost accounting, the company's indirect expenses are allocated based on the direct costs of activities (Chellasamy, 2007). This is unsatisfactory, and the two systems absorb the same cost, but can use...