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Activity Based Costing
The local accounting firm of Dewey, Cheetum, and Howe has had many profitable years providing financial planning and tax services to retirees. Recent developments in do-it-yourself tax software have begun to erode business and the firm wants to take a closer look at costs. As one of the firm's new hires you have been assigned to prepare an activity based cost analysis with the following data.
The focus of the analysis is to compare the cost of providing financial planning versus tax preparation services. Your analysis reveals the following about cost centers and their respective drivers:
The two main service activities and their related data follow:
Required 1. Compute the cost per cost driver for each of the three cost centers. 2. Use the results from part 1 to allocate costs from each of the three cost centers to both financial planning and tax preparation. Compute total cost and average cost per customer for both financial planning and tax preparation Analysis Component 3. Without providing computations, would the average cost of tax preparation be higher or lower if all center costs were allocated based on the number of customers alone? Explain
Define and describe activity based costing. Also employ some real-life examples of how companies implement this management tool. Offer some comparisons and contrasts and pros and cons from different stand points on this topic.
Babbel Company is a manufacturing firm that uses the job-order costing. The company's inventory balances were as follows the the beginning of the year
Calculate profit of each center if company uses the direct allocation method. Calculate the profit of each center if the company allocates cost center 1 first and then cost center 2
Allocate the service department costs based on air miles and evaluate World Airlines use of air miles as a basis for allocation. Do you think the cause-and-effect relationship is strong?
Determine the increase in net operating income in each market if the advertising campaign were to be initiated in that market.
A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.
Assuming that the amount of rent revenue from Condo 2 is $48,000, what amount of income did it earn? Based on the preceding information, will the company show finished goods inventory
Calculate the total work done in equivalent units and the unit cost for April. Calculate the cost of units completed and transferred. Also, compute the costs in ending work in process.
K's Cornerspot, a popular university eatery in a competitive market, has seating & staff capacity to serve about 600 lunch customers every day. For the past 2 months, demand has fallen from its previous near-capacity level. Concerned about his dec..
Calculate the firm's cash conversion cycle. Calculate the firm's operating cycle Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days.
1. delta manufacturing company has two service departments-custodial services and maintenance-and three production
problem 1the green acres inn is trying to determine its break-even point. the inn has 50 rooms that it rents at 75a
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