Describe which costing system is more accurate

Reference no: EM131036161

Question-

Pretty Good Picture framing is costing a large job (no. 60) for a client. The current costing system allocates manufacturing overhead based on machine hours. However the accountant is considering introducing an ABC costing system and has obtained the following
information:

Budgeted overhead (Costs)
Material handling	$40,000
Machine maintenance	$231,000
Product inspection	$18,000
TOTAL Mfg Overhear	$289,000

Buggeted quantity of cost drivers
Material moves	$500
Machine Hours	10,000
Inspections	1,200

JOB 60
Number of materials moves	10
Machine hours	40
Number of inspections	9

Required:

a) Describe which costing system is more accurate and explain why there are differences between traditional costing and ABC costing allocated amounts. Explain the need for these more modern (ABC) costing systems.

b) Some of the activities in the budget above may be classified as either value-added or non-value added or grey areas (partly value-added and partly non-value added).

Reference no: EM131036161

Questions Cloud

How these two derivatives are related to each other : Explain how these two derivatives are related to each other and when they become equivalent.

Able to communicate your ideas to specific audiences : Marketing is all about being able to communicate your ideas to specific audiences. The purpose of Assessment is to help you practise a specific style of communication, namely a presentation. As students you need to develop your presentation skills..

Write a book report about good to great : Write a Book Report about Good to Great. The book review shoulfd be two-page single space paper. In the review summarize the book "Good to Great".

Determine the temperature that a stationary probe inserted : Determine the temperature that a stationary probe inserted into the duct will read for each case.

Describe which costing system is more accurate : ACC5213 Management Accounting with a Strategic Perspective - S1 2016. Describe which costing system is more accurate and explain why there are differences between traditional costing and ABC costing allocated amounts. Explain the need for these mor..

Calculate the stagnation temperature and pressure : Calculate the stagnation temperature and pressure for the following substances

Scenario-contracts and pledges : The Dunphy family owned an older home in Los Angeles that was in need of a new roof, painting, and some other cosmetic repairs. Phil Dunphy was a real estate agent and his wife, Claire, was a homemaker and worked part-time at the school where the..

Action cycle links three activities-planning : "The Action Cycle links three activities-Planning, Implementation, and Evaluation. Each of these activities builds upon the others in a continuous and interactive manner.

Understand mechanism of hardenability in steels : Understand mechanism of hardenability in steels by Jominy-end quench method - Samples have been heat treated using the following conditions: Austenitizing at about 900oC for 30 minutes, water spray from one end until the whole samples cooled down to ..

User Account

All Pages