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What is high volume products and low volume products in activity based cost?
Neer83
Some products are high volume and low cost if they can be produced by machines cheaply and easily from heap products and sold at a large profit margin. The opposite would be low volume high cost items.
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What is the difference between Activity-based costing and traditional cost accounting?
Activity-based costing is a more accurate cost management system than TCA. One would use the ABC method when overhead is high, products are diverse, cost of errors high and competition is stiff. Traditional Cost Accounting is unable to calculate the 'true' cost of the product. TCA arbitrarily allocates overhead to the costs of objects. Total company's overhead is allocated to the products based on volume based measure e.g. labor hours, machine hours.
A well-designed activity-based costing system starts with?
assigning manufacturing overhead costs for each activity cost pool to products
A variable cost changes in proportion to changes in the volume in activity?
the answer is Variable Cost
What is curvilinear cost in accounting?
A Curvilinear cost is a cost that changes with volume(activity) but not at a constant rate.
Activity-based costing is a means of more accurately accounting for direct labor cost?
False. Activity-based costing is used to allocate indirect cost into direct costs.Regardng direct cost, traditional costing is as appropriate as activity-based costing.
Which of the following costs are included in the cost classification that is based on the relationship between total cost and volume of activity?
Varable cost and fixed cost
What is the difference between Activity-based costing and traditional cost accounting?
Activity-based costing is a more accurate cost management system than TCA. One would use the ABC method when overhead is high, products are diverse, cost of errors high and competition is stiff. Traditional Cost Accounting is unable to calculate the 'true' cost of the product. TCA arbitrarily allocates overhead to the costs of objects. Total company's overhead is allocated to the products based on volume based measure e.g. labor hours, machine hours.
A well-designed activity-based costing system starts with?
assigning manufacturing overhead costs for each activity cost pool to products
How is activity based costing better than traditional cost assignment systems?
Activity-based costing tries to take the nonuniformity of resource consumption across products into account in the assignment of costs.
A variable cost changes in proportion to changes in the volume in activity?
the answer is Variable Cost
What is break even analysis and how does it work with cost volume profit analysis?
cost volume profit is use anlyse how cost and profit change with change in volume of activity
What is curvilinear cost in accounting?
A Curvilinear cost is a cost that changes with volume(activity) but not at a constant rate.
Activity-based costing is a means of more accurately accounting for direct labor cost?
False. Activity-based costing is used to allocate indirect cost into direct costs.Regardng direct cost, traditional costing is as appropriate as activity-based costing.
When company shifts to abc costing and manufacturing overhead is based on direct labor hours do unit product costs of high volume products decrease and low volume products increase?
ABC Costing: Under this method costs varies according to activity so if high volume of product is produced then direct labour also utilized accordingly and manufacturing cost will be increase or decrease according to the utilization of direct labour hours.
What type of cost should not be assigned to products in an activity-based costing system?
Organization-sustaining costs, customer-level costs, and the costs of idle capacity should not be assigned to products. These costs represent resources that are not consumed by the products.
Activity based accounting?
Activity based accounting is a process in which factory overhead cost is allocated to different departments based on activity performed by those departments rather based on any predetermined rate.
How does Activity-Based Costing work?
Activity-based costing (ABC) systems for applying overhead is a two-stage procedure.The first step begins with identifying significant activities in the production of the products (that is grouping similar activities into an activity pool) and assigning a cost to that pool according to the amount of resources consumed by the activity pools.In the second step:A cost driver (an event that results in the incurrence of cost) is identified and quantified ($$$) for eachactivity pool.A pool rate is computed for each activity by dividing the cost of each activity pool by the respective cost driver quantity.The activity cost for each product line is determined by multiplying the pool rate by the cost driver quantity incurred by each product line.Finally, to arrive at the activity cost per unit of product the activity cost for each product line is divided by each product line's production volume.The advantage of this system of applying cost is that it fairly and reflectively distributes cost among products because of the incorporation of multi cost drivers. At each step of the production (activity pools), there is a cost driver that has a rate that reflects the cost of producing with that activity. Thus by the end of the production, the costs assign are reflective of the process and costs.Hope that answers your question :)
