ACCT 301 Saudi Electronic University the Abc System of Costing Paper

User Generated

Anjny2020

Business Finance

ACCT 301

Saudi electronic university

ACCT

Description

  • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
  • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • Late submission will NOT be accepted.
  • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
  • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
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College of Administrative and Financial Sciences Assignment 2 Deadline: 20 /03/2021 @ 23:59 (End of week 9) Course Name: Cost accounting Student’s Name: Course Code: ACCT 301 Student’s ID Number: Semester: 1 CRN: Academic Year: 1441/1442 H For Instructor’s Use only Instructor’s Name: Khaled Almuaqel Students’ Grade: Marks Obtained / Out of Level of Marks: High/Middle/Low Instructions – PLEASE • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. Page 1 of 2 Q1 What process is used to assign costs in an ABC system? Provide numerical example. (2.5 Marks) Q2 How is relevant quantitative and qualitative information used in special order decisions? Explain and analyze using numerical example. (2.5 Marks) Page 2 of 2
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Explanation & Answer

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College of Administrative and Financial Sciences

Assignment 2
Deadline: 20 /03/2021 @ 23:59 (End of week 9)

Course Name: Cost accounting

Student’s Name:

Course Code: ACCT 301

Student’s ID Number:

Semester: 1

CRN:
Academic Year: 1441/1442 H

For Instructor’s Use only
Instructor’s Name: KhaledAlmuaqel
Students’ Grade: Marks Obtained / Out of

Level of Marks: High/Middle/Low

Answer 1
The ABC system of costing is the modern alternative of traditional costing methods, allowing the
executives to understand the customer, product, and net profitability by giving a deep insight into
the information, which leads to informed decision making. The ABC primarily focuses on cost
drivers, which cause them to increase. Furthermore, the ABC uses Transaction based drivers
instead of volume-related, unlike traditional absorption costing. Instead of using labor hours, it
operates like the number of orders, making it easier for us to trace variable overheads and fixed
costs to products. Manufacturing, administrative, and selling cost are outlined in an ABC system.
The Process flow of ABC starts from the identification of costs that needs to be allocated, so
identifying advertising, warehousing costs related to the distribution channel and ignore research
as it relates to products.
Secondly, we need to identify the costs incurred for other services provided to another part of the
company rather than direct costs. The secondary pool typically consists of salaries, computer
services, etc. later on, these costs are allocated to other pools related to services and products.
Thirdly, create another cost pool for those having a closed link with the manufacturing of goods
and services, and it's likely having cost pools for every single product, which may include
procurement, R & D, advertising.
A data collection system is further used for the collection of information about drivers that
allocate costs in secondary pools to primary ones as well as assign pr...


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