ACIS 2116 Chapter 6 Part 2

ACIS 2116 Chapter 6 Part 2 - Activity-Based Costing ACIS...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Activity-Based Costing ACIS 2116 Chapter Six – Part 2
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 ABC Costing Example Continued Assume that a batch of Hokie Paraphernalia products has the following specifications: Direct Labor Hours 10 Purchase Orders 1 Shipments received 4 Machine Setups 2 Inspections 2
Image of page 2
3 ABC Costing Example How much overhead would be allocated to the batch if the traditional overhead allocation based on direct labor hours is used? 10 DLH * $115 per DLH = $1,150
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 ABC Costing Example How much overhead would be allocated to the batch if ABC Costing is used? Activity Amount Overhead Rate Overhead Allocated Purchase Orders 1 X 50.00 $ 50.00 $ Shipments received 4 X 6.25 $ 25.00 $ Machine Setups 2 X 122.22 $ 244.44 $ Inspections 2 X 26.67 $ 53.34 $ Total 372.78 $
Image of page 4
5 ABC versus Traditional Overhead Allocation When batch-level and product-level costs are present, ABC will usually shift costs from high volume products, produced in large batches, to low volume products produced in small batches. This cost shifting will usually have its greatest impact on the per unit cost of the low volume products.
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
6 ABC versus Traditional Overhead Allocation For example, assume that a company
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern