Managerial Accounting Report: Costing Analysis for Galaxy Incorporated
VerifiedAdded on 2023/06/09
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Report
AI Summary
This report analyzes the product costing methods employed by Galaxy Incorporated, focusing on the R2D2 and BB8 models. The analysis begins with a review of the provided financial statements and a discussion of the client's concerns regarding product profitability. The report calculates product costs using both traditional and activity-based costing methods. The traditional costing method allocates overhead based on direct labor hours, while the activity-based costing (ABC) method allocates overhead based on specific activities. The report then compares the unit product costs derived from both methods, highlighting the over-application of overhead to the R2D2 model and under-application to the BB8 model under traditional costing. Based on the findings, the report recommends that Galaxy Incorporated adopt the activity-based costing system to improve the accuracy of product costing, enhance competitiveness, and make better decisions regarding production and pricing. The report concludes by emphasizing the importance of ABC information for correcting product pricing, improving market competitiveness, and supporting sound decision-making.
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