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Nova Southeastern University H.

Wayne Huizenga School of Business & Entrepreneurship

Assignment for Course: ACT 5060_Accounting for Decision Makers Submitted to: Dr. Wonnell Submitted by: Tiffani Alexander N01054125 3691 Turtle Run Blvd Coral Springs, FL 33067 954-308-6037 305-926-3212 Date of Submission: January 19, 2012 Title of Assignment: ABC and Management (Serial # W12115)

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student's Signature: ____Tiffani Alexander__________________________ ***************************************************************** Instructor's Grade on Assignment: Instructor's Comments:

800.500 153.High number of quality inspections Total production overhead .017.000 $16. the corporate controller. . 2. using ABC.000 6. Charlotte has used a single plant-wide rate. machine hours for the allocation of overhead. She meets with you to discuss if you are able to implement Activity Based Costing at Charlotte.Collect cost data for envelopes and cups separately and classify by activity. you are eager to demonstrate that you should be the successor to Sue and agreed to pilot ABC at Charlotte. $5. Provide 3 possible non-value added activities that the Charlotte facility may be experiencing? Three possible non-value added activities that the Charlotte facility may be experiencing are: .500.Fourth Edition 2 ABC and Management Activity Based Costing and Management Sue.260.000.000 using machine hours as the cost driver Pool 2 = $2.Determine total cost of each activity for envelopes and cups separately.Analyze each activity for envelopes and cups according to its purpose and relevance.Eastvaco Case.Select a cost pool based on the analysis.000 Machine hours 200.000 You have determined.500 Revenue generated by the two products $15. . She thinks it is time for the Company to move forward with a more precise costing system. Required: 1. that overhead can be assigned to separate cost pools specifically: Pool 1 = $1. Being on the fast-track. .625 Number of quality inspections 1.000 using the number of quality inspections as the cost driver Historically.000 50.750.000 350.000 Units produced 1.257.500 Envelopes Cups Direct costs $8.500.000 $8. What are the steps in ABC implementation? The steps in ABC implementation are as follows: . You have gathered the following interim data for envelopes and cups.500 using direct labor hours as the cost driver Pool 3 = $1. has thus far been impressed with your performance at the Charlotte plant.250.000 Direct labor hours 34.

008.500 9.000 31.000 8.000 16.315.145.000 2.00 4654.000 9.128.76% Revenue Direct Costs Production Overhead Total Cost Gross Profit Rate of Return 4.000 5.750.000.684.000 5.000 252.537 11.500 9.000.750. Using the old plant-wide rate calculate gross profit and the rate of return on the two products.963 4.0175.782.250. Using the new cost pools and cost drivers calculate gross profit and the rate of return of the two products.537 5.800.500 2.017.000 1.000 34.500.250.000 8.300.19% 1.037 28.782.000 2.467.800.260.000 414.000.Eastvaco Case.000 Cost Driver Revenues Direct Costs Production Overhead Pool1 Pool2 Pool3 Total Cost Gross Profit Rate of Return Machine Hour Direct Labor Hour No.434.500 22.500 1.000 17.000 5.500 27.872.77% Cups 16.000.500 22.500 30.463 32.017.843.54% Total 31.582.76% .000 17.Fourth Edition 3 .332.71% 30.000 1. of Quality Inspections 12.000 1.500 200.Human Resource Activities .257.000 8. Envelopes Cups Total 15.017.800.Administrative Activities 3.963 10.800.000 8. Envelopes 15.