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ACCT204 Management Accounting2

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Question:

1) Perform overhead analysis systematically firstly based on traditional costing system. The overhead analysis under traditional costing system involves two-stage allocation process by assigning all manufacturing overheads to production and service cost centres, and followed by reallocating the costs assigned to service cost centres to production cost centres. Provide the calculations of the manufacturing costs assigned to the two products (Simple luggage and Complex luggage).
2) Perform again the overhead analysis using Activity-based costing (ABC) system. The overhead analysis under ABC system involves assigning costs to activity cost centres. Provide the calculations of the manufacturing costs assigned to the two products (Simple luggage and Complex luggage) based on ABC system.
3) Compare the product costs calculated under the traditional costing system and ABC system and explain the rationale behind the differences in product costs calculated under the two costing systems.
4) Analyse the cost versus benefit considerations in adopting ABC system in Happy Traveller Ltd.
5) Explain in details in what ways the ABC cost management can be applied in Happy Traveller Ltd besides assigning costs to its products.
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