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Why traditional cost systems distort product costs because?
they emphasise financial accounting requirements
What systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?
Job Order Cost System
What is the difference between traditional based costing and target costing?
Traditional Cost Accounting System: In this system company first produce the product and then determine the cost of production and then try to sell that product at price covering that cost plus certain percentage of markup on cost.Target Costing: In this system first of all company determines the value of product in the eyes of customer that is how much a customer is willing to pay for the product and then if cost of production of that product is more then the customer willing to pay then company makes analysis of how they can reduce the cost of production to the level of cost a customer willing to pay by reducing the components of product which is costing towards final price but not giving any value to customer and in this way company tries to acheive the target cost customer willing to pay.
What are the differences between activity-based absorption costing system and traditional absorption costing system?
An activity-based absorption costing system defines the cost by how many activities a product unit uses. A traditional absorption costing system defines the cost by how much money went into making the product unit.
Is depreciation on a machine a period cost or product cost?
product cost
Why traditional cost systems distort product costs because?
they emphasise financial accounting requirements
How do traditional cost assignment systems assign direct costs?
Traditional cost assignment systems typically would assign directly to the cost objects the costs of those resource consumptions that can be economically traced directly to units of output requiring the resources.
What is one disadvantage of traditional cost assignment systems?
high-volume, relatively simple product will end up overcosted and subsidizing a subsequently undercosted, low-volume, relatively complex product, resulting in inaccurate unit costing and suboptimal product-line pricing decisions
What systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?
Job Order Cost System
What is the difference between traditional based costing and target costing?
Traditional Cost Accounting System: In this system company first produce the product and then determine the cost of production and then try to sell that product at price covering that cost plus certain percentage of markup on cost.Target Costing: In this system first of all company determines the value of product in the eyes of customer that is how much a customer is willing to pay for the product and then if cost of production of that product is more then the customer willing to pay then company makes analysis of how they can reduce the cost of production to the level of cost a customer willing to pay by reducing the components of product which is costing towards final price but not giving any value to customer and in this way company tries to acheive the target cost customer willing to pay.
What are the differences between activity-based absorption costing system and traditional absorption costing system?
An activity-based absorption costing system defines the cost by how many activities a product unit uses. A traditional absorption costing system defines the cost by how much money went into making the product unit.
Is depreciation on a machine a period cost or product cost?
product cost
Is factory supplies a product cost or period cost?
Product cost
Cost of a delivery truck is a period cost or product cost?
Should typically be a product cost.
Is fixed cost relevant in determining price of a product?
The fixed cost is relevant in determining price of a product. This is a cost that is associated with the product and will contribute to the total production cost of a product.
Differentiate between period cost and product cost?
Period Cost: It is that cost which must be incurred by the company no matter it produce any product or not. Product cost: Product cost is that cost which is necessary to produce any production units to earn revenue.
Is factory supplies a product or a period cost?
Product cost
