Unfortunately‚ this has brought the gross margin for pumps DOWN (below 20%). Wilkerson Company’s competitive situation is to continue competing in the manufacturing of pumps while meeting planned gross margins of 35%. Wilkerson needs accurate product costing to achieve gross margin goals as well as support both the internal and external shareholders that depend on this information. Wilkerson has defined goals for gross margins and in order to hit these‚ they need to understand their production cost and
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Case 5 – 69 1.0 Compute the target prices for the three models‚ based on the traditional‚ volume-based product costing system. The volume based product costing system comprises the total product cost multiplied by a target selling price. The target selling price in a volume based product costing system can differ from an activity based product costing system because of the way the manufacturing overhead costs are lumped together and applied on the basis of direct-labour hours over all three products
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and strategies. III. Course Learning Outcomes (CLOs): On completion of this course‚ students should be able to: 1. Students should develop a basic understanding of managerial accounting concepts such as cost‐volume‐profit‚ budgeting‚ product costing and cost behaviors. 2. Students should be able to generate and use cost information when making pricing and resource allocation decisions. 3. Students should
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1. Unit based costing first assigns overhead costs to departmental pools and then assigns these costs to products using predetermined overhead rates. a. True b. False ANSWER: True 2. Management information systems can be divided into a unit-based type and activity-based type. a. True b. False ANSWER: True 3. Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level. a. True b. False ANSWER:
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Managerial Analysis 17-2 Alberto Nicholas. University of Phoenix ACC561/PD14MBA08 June 18‚ 2015 Dr. Norris Dorsey Managerial Analysis 17-2 A) Compute the activity-based overhead rate for each activity pool. Activity Cost pools Cost Driver Annual Cost Total estimated Drivers Activity-based overhead rate Market Analysis Hours of Analysis $1‚050‚000 15‚000 hours $70.00 Product Design Number of Designs $2‚350‚000 2‚500 designs $940 Product Development Number of Products $3‚600‚000 90 products
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freight. An additional markup is added to cover the approximate cost for general and selling expenses‚ plus an allowance for profit. The markups were determined at the start of each year‚ based on actual expenses in prior years and general industry and competitive trends. Actual prices to customers were adjusted based on long-term relationships and competitive situations‚ but were generally independent of the specific level of service provided to that customer‚ except for desk top deliveries. The current
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and delivery process‚ and deficiencies in cash flows. For Dakota Office Products (DOP)‚ its existing costing system was inadequate because it is incapable of accounting for even all of the known costs such as the desktop delivery service as well as hidden costs such as the ten percent DOP paid to maintain its working capital line of credit for accounts receivable. Using the Activity Based Costing(ABC) methodology can be utilized to also improve processes and identify opportunities to improve business
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Activity-based Costing (ABC) and Activitybased Management (ABM) Implementation – Is This the Solution for Organizations to Gain Profitability? Authors*: Ildikó Réka CARDOŞ‚ Ştefan PETE A bstract. Adherents of ABC/ABM systems claimed traditional management accounting systems generated misleading costs in a contemporary‚ tumultuous‚ often changing business environment and implementing ABC/ABM would remedy this. That is why activity-based costing (ABC) and activity-based management (ABM)
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but customers are price-conscious as well. Data for the 20x5 budget include manufacturing overhead of $12‚000‚000‚ which has been allocated on the basis of each product’s direct-labor cost. The budgeted direct-labor cost for 20x5 totals $1‚200‚000. Based on the sales budget and raw-material budget‚ purchases and use of raw materials (mostly coffee beans) will total $5‚800‚000. The expected prime costs for one-pound bags of two of the company’s products are as follows: |
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products. This can be done by first; adopting activity based costing (ABC) method as suggested by Hampton instead of the existing simple costing method in the company. ABC recognizes the relationship between activities‚ cost and products which helps to allocate cost per unit to products more accurately. The main activities that run the business must be identified and analyzed to determine cost driver for each activity. We agree to the four major activities suggested by Hampton however‚ disagree on her
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