This assignment focuses on Activity Based Costing (ABC) calculations for two products, Fred and Martha. It requires students to determine the cost of each activity driver (machine hours, production runs, etc.), calculate the total overhead costs, and then allocate those costs to each product based on their consumption of activities.  The assignment further delves into calculating the cost per unit for both Fred and Martha by considering direct materials, labor, and allocated overhead costs. Finally, students determine the selling price for each product based on a 120% markup over the cost.

Solved assignment on activity based costing for Fred and Martha, including cost per unit and selling price calculation.

[SOLVED] Activity Based Costing Calculations

Activity Based Costing & Pricing

This assignment delves into the comparison between activity-based costing (ABC) and the conventional method of cost allocation. It presents a scenario involving two products, FRED and MARTHA,  calculating their costs using both methods. The analysis reveals that the traditional approach can lead to mispricing due to its simplified allocation based on a single overhead rate. Conversely, ABC provides a more accurate representation of costs by considering the consumption of resources by specific activities.

Activity-Based Costing vs. Traditional Method

The assignment content discusses the difference between conventional and activity-based costing methods in determining the selling price of products. Under conventional approach, costs are allocated using a plant-wide allocation rate, which may not reflect actual resource consumption. Activity-based costing (ABC), on the other hand, allocates costs based on actual resources used in manufacturing, providing a more accurate picture of product costs. The example illustrates how ABC can lead to under-costing or over-costing of products compared to conventional approach. The advantages of ABC include improvement in process, scientific method of cost allocation, competitive pricing, and identification of costs at each level. However, the implementation costs, flaws in data, and lengthy process are some of the disadvantages of using ABC.

Calculation of Selling Price under Activity Based Costing

Essay

Business

This assignment examines the differences between activity-based costing (ABC) and the conventional method of allocating manufacturing overhead costs.  It analyzes how each method impacts product pricing for two products, FRED and MARTHA, highlighting the inaccuracies that can arise from using a conventional approach. The assignment further discusses the advantages and disadvantages of ABC, emphasizing its benefits in providing accurate cost allocation, identifying wasteful activities, and enabling better decision-making through informed pricing strategies.

La Consolacion College Manila

Activity Based Costing vs Conventional Method

The assignment content discusses the calculation of selling price under Activity-Based Costing (ABC) and compares it with the conventional method. The conventional method allocates indirect costs using a blanket rate, which can lead to mispricing of products. ABC, on the other hand, is a scientific and reliable method that considers actual consumption of resources by various activities. It involves identifying cost drivers, allocating overheads according to consumption, and provides accurate product costs. The benefits of ABC include accurate product costs, cost behavior information, process enhancement, proper utilization of capacity, improvement in pricing strategies, and better decision making. However, there are also disadvantages, such as high implementation costs, accuracy of data, lengthy process, and not being suitable for smaller companies.

Calculating Selling Price Under Activity-Based Costing

Report

This assignment explores the concept of Activity Based Costing (ABC), highlighting its benefits and limitations. It delves into the advantages of ABC, such as improved cost allocation accuracy and better decision-making, while also addressing the challenges associated with its implementation, including data collection complexities and potential resistance from employees. The document concludes by emphasizing the importance of ABC in today's competitive environment for companies seeking efficiency improvements.

Activity Based Costing: Advantages and Disadvantages

Financial  Managerial Accounting

This assignment delves into Activity Based Costing (ABC), examining its application in allocating overheads and calculating production costs with greater accuracy. Students are tasked with outlining the benefits of ABC, such as improved cost behavior understanding, identification of non-value adding costs, and enhanced cost management. Additionally, the assignment requires an analysis of the drawbacks associated with ABC, including implementation costs, complexity in selecting cost drivers, and limitations for businesses producing a limited number of products.

Activity Based Costing & Pricing

End of preview

Activity-Based Costing vs. Traditional Method

Calculation of Selling Price under Activity Based Costing

Activity Based Costing vs Conventional Method

Calculating Selling Price Under Activity-Based Costing

Activity Based Costing: Advantages and Disadvantages

Activity Based Costing Analysis and Benefits

Activity Based Costing & Pricing

End of preview

Activity-Based Costing vs. Traditional Methodlg...

Calculation of Selling Price under Activity Based Costinglg...

Activity Based Costing vs Conventional Methodlg...

Calculating Selling Price Under Activity-Based Costinglg...

Activity Based Costing: Advantages and Disadvantageslg...

Activity Based Costing Analysis and Benefitslg...

Activity-Based Costing vs. Traditional Method

Calculation of Selling Price under Activity Based Costing

Activity Based Costing vs Conventional Method

Calculating Selling Price Under Activity-Based Costing

Activity Based Costing: Advantages and Disadvantages

Activity Based Costing Analysis and Benefits