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Sample Question and Answer of Cost Accounting Assignment
ACC200 Traditional And ABC Costing
What is the difference between actual overhead and applied overhead?
1)Calculate cost per unit of the two models of sewing machines under the current traditional costing system.
2)Calculate cost per unit of the two models of sewing machines under Activity based Costing.
3)Sewing easy sells the advance model at a price of total cost (under the current costing system) plus 30% and is willing to give the same selling price to the overseas buyer. The overseas buyer wants to purchase only the advance model. Prepare December 2017 Profit and Loss Statement for the advance model where (a) traditional costing is used to calculate the product cost (b) Activity Based Costing is used to calculate the product cost. Analyse why the overseas buyer is interested to buy only the advance model. In your discussion you should highlight the importance of accurate product costing.
4)iscuss why actual overhead and applied overhead may be different at year end and state three ways to deal with under/over applied overhead costs (no journal entries are required).
Costing is the act of breaking down the costs and analysing the individual constituents and preparing a report to be submitted to the management of the company. The analysis of the costing is necessary to understand the impact of the costs on the earnings of the company and rectifying the same if there is any need. The methods to measure the overhead costs are the traditional method, activity based costing, prorated based costing. All the three methods have been described in this report and a detail analysis is done in this report (Manunen, 2013). Read More...
Cost Accounting Assignment Help Online: Know your definitions
Our cost accounting assignment solutions always try to explore the fundamental concepts in cost. When you know your basics, answering cost accounting assignment questions correctly become way easier.
Cost is used in various business applications like budgeting, valuation, and financial accounting. Here are the basic types of cost-related definitions that you must be aware of when trying to score stellar grades in the subject or looking to solve my accounting paper.
- Fixed cost and variable cost
Fixed costs are those that do not vary with output. Variable costs, on the other hand, do. Fixed costs are also called overhead costs at times. Fixed costs may include rent, supervisors’ salaries and depreciation within a business structure. Manufacturing overheads or fixed costs may include taxes and insurance. Cost of labor and materials, on the other hand, are variable costs.
- Direct cost and indirect cost
Those which can be directly attributed to the production of output are direct costs. Cost accounting states that only those costs that are tied directly to the volume of production can be charged to products as they are manufactured. Indirect costs are quite similar to fixed costs, on the other hand. Not directly related to the volume of output, these may include indirect labor, rent of the factory and expense for tools in a manufacturing set-up.
- Product cost and period cost
Product costs do not change over time. They are the costs that a firm incurs on a steady basis with direct relation to the output. In full cost accounting systems, even fixed manufacturing costs and variable costs all become a part of product costs. Period costs, on the other hand, are charged concerning the current period. They are not associated with the valuing of inventories.
Sunk costs do not alter or vary with the nature of business or trading activities. Costs that require current resources such as ready cash fall under out-of-pocket or sunk costs. Costs that have already been incurred are thus sunk costs. Depreciation value for cars and antique furniture are some of the examples of sunk costs.
- Incremental and opportunity cost
Incremental costs signify the difference between two alternatives that a person can take based on their business decisions. Opportunity costs include the cost of all those economic activities that a business chooses not to undertake so that they can produce the current goods and services. For example, an unused plot within factory premises that could have otherwise been rented out is an example of opportunity cost.
Expenses associated with everyday business activities fall under operating costs. They include all the costs that account for the operating expenses of a business. These also consider variable and fixed costs. The rent and bills for utilities and amenities for a manufacturing plant all fall under operating costs. Accountants always ensure that operating expense ratio never tips off balance for it represents a company’s efficiency in using the resources to generate sales.
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