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Activity-Based Costing Analysis at Jackson Company

   

Added on  2020-06-06

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Activity-Based Costing Analysis at Jackson Company_1

Table of ContentsINTRODUCTION...........................................................................................................................1a). Per unit cost by using conventional approach:.......................................................................1b). Cost per activity for each activity cost pool:.........................................................................1c).Product cost per unit as per Activity-based-costing technique: .............................................2d). Calculate the price:................................................................................................................3e). How conventional value approach leads to misprice the product:.........................................3f). Benefits of activity based Costing..........................................................................................4g). Disadvantages of using ABC costing...................................................................................5CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7
Activity-Based Costing Analysis at Jackson Company_2

INTRODUCTIONManagement accounting helps the managers and other key members to take anindependent decisions so that they could able to frame decisions in terms of analysing the cost. Ifthere is any wastage of cost, then with the help of this, the cost can be eliminate. Normally, thisis occurred under the manufacturing entities (Islam, and Hu, 2012). Under this project, theJackson limited produces two product Fred and Martha and the cost accountant emphasis tocalculate the cost by using conventional approach and activity based costing methods. In thisproject, the company opt activity based accounting approach so that the price of the product canbe reduced by way of eliminating the extra cost. Under this project, the cited company needs tomake their business operations effectively so that the business can get their objectives. a). Per unit cost by using conventional approach:ParticularMartha cost per unitFred cost per unit Direct Material6040Direct Labour4530Manufacturing overheads 816000/6000136136Total per unit cost 241206Under this calculation, the costs as per the conventional costing, are calculated and this isthe method which was used earlier while calculating cost. All direct costs are the same as earlierbut the manufacturing overheads cost changed under this method. However, there are so manyadvance techniques emerged in the market under which the costs are optimum used. Under thistechnique, the manufacturing overheads are calculated by sum up of all entire manufacturing costand then divide it by total number of units.b). Cost per activity for each activity cost pool:An activity cost pool is a pre-set costs group which arises at the time of specifiedoperations are performed in a firm (Activity based costing, 2017). By accounting for entire costsare incurred under a particular activity with a pool, this is an easy process to allot those costs toproducts and covered an accurate forecasting of production costs. Activity cost pool is the entirecost required to execute production. For using ABC method, company need to assess the activities which are helpful formaking the procedures to company's cost object. This is an essential task to record that this1
Activity-Based Costing Analysis at Jackson Company_3

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