Example of ABC System

Assume an example, such the cost pool for the ordering activity totaled of Ksh.100, 000 and such there were 10,000 orders the cost driver. Therefore all products would be charged along with Ksh.10 for each order it required. Therefore a batch requiring five orders would be charged along with Ksh.50 like its share of the ordering costs for the period.

Absorption costing and ABC are same in many respects.  In mutually systems, direct costs go straight to the product and overheads are allocated to production cost centres/cost pools. The dissimilarity lies in the manner whether overheads are absorbed into products. Absorption costing most commonly employs two absorption bases machine hours and /or labour hours to charge overheads to products ABC employs many cost drivers like absorption bases number of orders, number of dispatches.

This refers to the assignment or distribution of a group of costs to cost centers. That costs are assimilated in as same and must be allocated on the similar base. Allocation base is the measure of activity employed to allocate a cost pool to the cost centers.

Posted Date: 2/5/2013 7:48:14 AM | Location : United States

Ask an Expert

Related Discussions:- Example of abc system, Assignment Help, Ask Question on Example of abc system, Get Answer, Expert's Help, Example of abc system Discussions

Write discussion on Example of abc system
Your posts are moderated

Write your message here..

Related Questions

Relationship between cost accounting and business enterprise, Relationship ... Relationship between Cost Accounting and Business Enterprise Cost accounting, like will be mentioned later to adopts a cost center approach to accounting for costs. A cost cen

Prepare the material cost budget of products of a company, Prepare the Mate... Prepare the Material Cost Budget of products of a Company For a company along with many products, a periodic budget would be developed given as: Assume a firm has 3 products X

Find out maximum cost-recovery deduction, The Gladys Corporation buys offic... The Gladys Corporation buys office equipment costing $426,000 on May 12, 2013. In 2015, new and improved models of the equipment make it obsolete, and Gladys sells the old equipme

Calculate the amounts that will show in the statement, MX obtains 80% of th... MX obtains 80% of the 1 million issued $1 ordinary share capital of FZ on 1 May 2009 for $1,750,000 when FZ's reserved earnings were $920,000. The carrying worth was considered

Organize the accounting entries, JK is a motor dealership which organizes i... JK is a motor dealership which organizes its financial statements to 30 November. In the year to 30 November 2009, transactions integrated the following: (a) JK had motor vehicl

Mathematical derivation of eoq, Mathematical Derivation of EOQ Let cos... Mathematical Derivation of EOQ Let cost per order is represented via Co. it is the cost incurred every instance one order is placed. Let the economic quantity purchase ever

Computing information, This coursework is intended to help you develop your... This coursework is intended to help you develop your understanding of shell scripting in both a Windows and Unix environment. You should undertake this coursework in groups cons

Calculate the pay back period after tax cash flows, An investment alternati... An investment alternative in a project requires a capital cost of $102 millions completed at time zero. The investment will produce a stream of revenue of $50 millions per year ove

Why does rent control result in a shortage of rental unit, 1. Why does rent... 1. Why does rent control result in a shortage of rental units. 2. How does price elasticity of demand affect how much of a tax is passed on to the consumer and how much is absor

Standards and budgets, Standards and Budgets Budgets like you recall f... Standards and Budgets Budgets like you recall from the previous section, are simply plans for expected future performance expressed in quantified monetary terms. Therefore the