Week 5 HW

Week 5 HW - -1) Prefer this one. The Cost per unit adjusts...

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5-34 Role of Activity-Based Costing in Implementing Strategy What are the key strategic issues facing Laurent, and how can ABC costing assist in resolving these issues? 5-51 Activity-Based Costing; Customer Group Cost Analysis
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The City of Indianapolis-Potholes Case 1. 2. $1,044,000 / [180K+168K] = $3.00 3. $1,044,000 / [36K * 12] = $2.42 4. Charge operating expenses when operating at peak capacity (36,000 per month) 5 peak months are April through August. 5. This is not plausible procedure to consider because the cost rate in the peak period is half the cost rate in the slack period. The peak period requires more resources to be acquired and any additional production in the peak-period months will require even more capacity to be added. 6. The strengths and weaknesses of the 5 approaches:
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Unformatted text preview: -1) Prefer this one. The Cost per unit adjusts to the level of production during peak and non-peak months. -2) This approach is a basic $3 cost throughout the year but you dont make enough profit in peak months to cover for losts profit in non-peak months.-3) The price is too low, may not make enough profit.-4) May help cover costs when operating at peak-time.-5) If you sell more than capacity/what is expected, this approach may cost you more. Month Jan Feb March Apr May June July Aug Sept Oct Nov Dec Cost $87K $87K $87K $87K $87K $87K $87K $87K $87K $87K $87K $87K Production 24K 24K 24K 36K 36K 36K 36K 36K 24K 24K 24K 24K Cost/unit $3.63 $3.63 $3.63 $2.42 $2.42 $2.42 $2.42 $2.42 $3.63 $3.63 $3.63 $3.63...
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Week 5 HW - -1) Prefer this one. The Cost per unit adjusts...

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