Cost Drivers and Activity-Based Costing

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timer Asked: Jan 1st, 2018
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Question description

this is an accounting midterm called Milestone three.There is a calculation part and a narrative part. Please refer to the attached documents

ACC 550 Milestone Three Guidelines and Rubric Overview: The final project for this course is the creation of a quantitative analysis that includes an Excel spreadsheet accompanied by a memo to management. Accountants provide management with the logistics of the business that are crucial for daily operations and a company’s overall success. In any business, it is of the utmost importance to be aware of all finances and internal processes. Cost accountants focus solely on the internal processes of a business and are tasked with eliminating any unnecessary costs in order to maximize profits. For the final project, you have been tasked with conducting a quantitative analysis that looks into the internal processes of a company. Based on your analysis, you will formulate recommendations to management that aim to improve internal processes and increase profits for the company. Prompt: For this milestone, submit a draft of the alternative costing method section of the final project (Section IV), including all of critical elements listed below. Refer to the Hampshire Company Case Study document, as this provides details on how to complete this milestone. All calculations for your quantitative analysis should be completed in the Hampshire Company Spreadsheet. You will provide a rough draft of your qualitative analysis in a Word document. Specifically, the following critical elements must be addressed: IV. Alternative Costing Method There are various costing methods available for companies to implement. As a company grows, it may become beneficial to consider an alternate costing method. A. Identify an alternative costing method that could benefit this company, and describe the main characteristics of that method. B. What should a company look for when trying to determine whether they should adopt such a system? C. Should the company adopt this alternative costing method? Defend your response. If you would like a refresher course on using various features of Excel, sign in to Atomic Learning and type “Excel” in the search box. This will provide you with options to select the specific level of training that you need (intro, intermediate, or advanced) and the specific version of Excel that you have (e.g., 2011 or 2013). The trainings are broken down into small, meaningful chunks. Therefore, you should be able to find specific topics at each level that will meet your needs. Rubric Guidelines for Submission: The written portion of this submission must be a two- to three-page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style. Use the Hampshire Company Spreadsheet to submit your calculations as an Excel file. Critical Elements Alternative Costing Method: Main Characteristics Proficient (100%) Identifies alternative costing systems and describes the main characteristics of each Alternative Costing Method: Adopt Determines what the company should look for when deciding to adopt an alternative costing system and supports response with examples Determines whether the company should adopt the alternative costing method and defends response Submission has no major errors related to citations, grammar, spelling, syntax, or organization Alternative Costing Method: Method Articulation of Response Needs Improvement (75%) Identifies alternative costing systems but does not describe the main characteristics of each, or identification or description contain inaccuracies Determines what the company should look for when deciding to adopt an alternative costing system but does not support response with examples Determines whether the company should adopt the alternative costing method but does not defend response Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Not Evident (0%) Does not identify alternative costing systems Value 30 Does not determine what the company should look for when deciding to adopt an alternative costing system 30 Does not determine whether the company should adopt the alternative costing method 30 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Earned Total 10 100%
ACC 550 Final Project Guidelines and Rubric Overview The final project for this course is the creation of a quantitative analysis that includes an Excel spreadsheet, accompanied by a memo to management. Accountants provide management with the logistics of the business that are crucial for daily operations and a company’s overall success. In any business, it is of the utmost importance to be aware of all finances and internal processes. Cost accountants focus solely on the internal processes of a business and are tasked with eliminating any unnecessary costs in order to maximize profits. In this assessment, you have been tasked with conducting a quantitative analysis that looks into the internal processes of a company. Based on your analysis, you will formulate recommendations to management that aim to improve internal processes and increase profits for the company. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, and Seven. Your final submission will occur in Module Nine. In this assignment, you will demonstrate your mastery of the following course outcomes:     ACC-550-01: Apply cost-volume-profit (CVP) analysis based on cost classification for planning and control of internal accounting processes within an organization ACC-550-02: Assess cost and revenue allocation methods for providing relevant information to decision makers ACC-550-03: Select the optimal inventory management method for meeting the needs of an organization ACC-550-04: Evaluate cost accounting performance and planning tools for their impact on business operations Prompt Conduct a quantitative analysis of a company’s internal processes using the Hampshire Company Case Study document. Your analysis will consist of completing the Hampshire Company Spreadsheet and will be accompanied by a memo to management. Specifically, the following critical elements must be addressed: I. Cost-Volume-Profit Analysis Cost-volume-profit (CVP) analysis is a useful tool for informing short-term economic planning within an organization. In this section, a CVP analysis will be conducted and used to inform business decisions and recommendations. A. Perform a CVP analysis based on cost classifications. B. Explain how a CVP analysis can assist management with short-term economic planning. Support your response with examples from your CVP analysis. C. Accurately compute the break-even quantity and break-even revenue. D. Determine whether the company is breaking even. What are the CVP analysis implications on planning? II. Inventory Management Inventory management serves to minimize the cost to maintain inventory and maximize returns. In this section, the company’s financial data will be reviewed in order to determine the optimal inventory management system. A. Determine an optimal cost allocation method based on the relevant costs. B. Describe how this method should be used by decision makers to fulfill their responsibilities. Support your response with examples. C. What are the pros and cons of implementing the just-in-time (JIT) inventory system? Do the pros outweigh the cons for this company? D. Explain how the just-in-time (JIT) inventory system can benefit this organization. Defend your response. E. Identify the inventory management method you recommend, and explain why this method will benefit the company. III. Benchmarking In this section, benchmarking will be reviewed. Benchmarking can be implemented in various ways depending on a company’s circumstances. Your company has decided to implement benchmarking and would like you to research and recommend the most effective approach. A. What is the advantage to benchmarking in terms of improving companies’ performance? Support your response. B. Identify possible approaches to benchmarking. Describe each. C. Which benchmarking method should management adopt and why? IV. Alternative Costing Method There are various costing methods available for companies to implement. As a company grows, it may become beneficial to consider an alternate costing method. A. Identify an alternative costing method that could benefit this company, and describe the main characteristics of that method. B. What should a company look for when trying to determine whether they should adopt such a system? C. Should the company adopt this alternative costing method? Defend your response. V. Memo to Management Your memo to management should serve as a summary of your quantitative analysis, reviewing the key points and recommendations that you feel management should be aware of. A. Describe the overall findings of your analysis, including key elements that management should be aware of. B. Make a recommendation to management based on your cost accounting analysis that will enhance business planning. C. Recommend a performance tool to management based on your cost accounting analysis that will improve business operations. You may use the following resources to help you prepare your memo to management: Purdue OWL: Memos contains information related to formatting a memo, and Purdue OWL: Sample Memo presents a sample of a memo that you can use as a guide when you format the memo for the final project. If you would like a refresher course on using various features of Excel, sign in to Atomic Learning and type “Excel” in the search box. This will provide you with options to select the specific level of training that you need (intro, intermediate, or advanced) and the specific version of Excel that you have (e.g., 2011 or 2013). The trainings are broken down into small, meaningful chunks. Therefore, you should be able to find specific topics at each level that will meet your needs. Milestones Milestone One: Draft of Cost-Volume-Profit Analysis In Module Three, you will submit a draft of the cost-volume-profit analysis (Section I of the final project), including all critical elements as listed above. Refer to the Hampshire Company Case Study document, as this will provide you with details on how to complete this milestone. All calculations for your quantitative analysis should be completed in the Hampshire Company Spreadsheet. You will provide a rough draft of your one- to two-page qualitative analysis in a Word document. The Word document must be in APA format. Once you have completed your analysis, submit your Word and Excel documents. This milestone will be graded with the Milestone One Rubric. Milestone Two: Draft of Inventory Management and Benchmarking In Module Five, you will submit a draft of the inventory management and benchmarking sections of the final project (Sections II and III, respectively), including all critical elements as listed above. Refer to the Hampshire Company Case Study document, as this will provide you with details on how to complete this milestone. All calculations for your quantitative analysis should be completed in the Hampshire Company Spreadsheet. You will provide a rough draft of your three- to fourpage qualitative analysis in a Word document. The Word document must be in APA format. Once you have completed your analysis, submit your Word and Excel documents. This milestone will be graded with the Milestone Two Rubric. Milestone Three: Draft of Alternative Costing Method In Module Seven, you will submit a draft of the alternative costing method section of the final project (Section IV), including all critical elements as listed above. Refer to the Hampshire Company Case Study document, as this will provide you with details on how to complete this milestone. All calculations for your quantitative analysis should be completed in the Hampshire Company Spreadsheet. You will provide a rough draft of your two- to three-page qualitative analysis in a Word document. The Word document must be in APA format. Once you have completed your analysis, submit your Word and Excel documents. This milestone will be graded with the Milestone Three Rubric. Final Project Submission: Quantitative Analysis and Memo to Management In Module Nine, you will submit your quantitative analysis and memo to management. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded using the Final Project Rubric. Deliverables Milestone One Two Three Deliverable Draft of Cost-Volume-Profit Analysis Draft of Inventory Management and Benchmarking Draft of Alternative Costing Method Final Project Submission: Quantitative Analysis and Memo to Management Module Due Three Five Grading Graded separately; Milestone One Rubric Graded separately; Milestone Two Rubric Seven Nine Graded separately; Milestone Three Rubric Graded separately; Final Project Rubric Final Project Rubric Guidelines for Submission: The financial portions of your quantitative analysis should be submitted using the Hampshire Company Spreadsheet. The written portions of your qualitative analysis should be submitted as a six- to nine-page Microsoft Word document. Your memo to management should be submitted as a two- to three-page Microsoft Word document. Both Word documents should use double spacing, one-inch margins, and 12-point Times New Roman font. Sources should be cited according to APA style. Critical Elements Cost-Volume-Profit Analysis: Analysis Cost-Volume-Profit Analysis: Economic Planning Cost-Volume-Profit Analysis: Break-Even Exemplary Proficient Performs a cost-volume-profit analysis based on cost classifications (100%) Meets “Proficient” criteria and Explains how a CVP analysis can demonstrates a nuanced assist management with shortunderstanding of the relationship term economic planning and between CVP and short-term supports response with examples planning (100%) (90%) Accurately computes the breakeven quantity and break-even revenue (100%) Needs Improvement Performs a cost-volume-profit analysis, but it is not based on cost classifications (70%) Explains how a CVP analysis can assist management with shortterm economic planning but does not support response with examples, or explanation is cursory or inaccurate (70%) Computes the break-even quantity and break-even revenue, but there are issues with accuracy (70%) Not Evident Does not perform a cost-volumeprofit analysis (0%) Value 5.4 Does not explain how a CVP analysis can assist management with short-term economic planning (0%) 5.4 Does not compute the breakeven quantity and break-even revenue (0%) 5.4 Cost-Volume-Profit Analysis: Implications Meets “Proficient” criteria and Determines whether the uses industry-specific language to company is breaking even and establish expertise (100%) identifies cost-volume-profit analysis implications for planning (90%) Inventory Management: Meets “Proficient” criteria and Relevant Costs demonstrates a nuanced understanding of the relationship between optimal cost allocation and relevant costs (100%) Inventory Management: Meets “Proficient” criteria, and Method description is exceptionally clear and contextualized (100%) Determines an optimal cost allocation method based on the relevant costs (90%) Recommends how the method should be used by decision makers to fulfill their responsibilities and supports response with examples (90%) Determines whether the company is breaking even but does not identify cost-volumeprofit analysis implications on planning, or determination or identification contain issues with accuracy (70%) Determines an optimal cost allocation method, but determination is not based on the relevant costs (70%) Recommends how the method should be used by decision makers to fulfill their responsibilities but does not support response with examples (70%) Inventory Management: Meets “Proficient” criteria, and Identifies the pros and cons of Identifies the pros and cons of Pros and Cons description is well supported with implementing JIT and describes implementing JIT but does not examples (100%) whether the pros outweigh the describe whether the pros cons for this company (90%) outweigh the cons for this company (70%) Inventory Management: Meets “Proficient” criteria, and Explains how the JIT inventory Explains how the JIT inventory Inventory System explanation is exceptionally clear system can benefit the system can benefit the and contextualized (100%) organization and defends organization but does not defend response (90%) response (70%) Inventory Management: Meets “Proficient” criteria and Identifies the inventory Identifies the inventory Inventory uses specific examples to support management method management method description (100%) recommended and explains why recommended but does not this method will benefit the explain why this method will company (90%) benefit the company (70%) Benchmarking: Meets “Proficient” criteria, and Identifies an advantage of Identifies an advantage of Advantage support includes specific benchmarking and supports benchmarking but does not examples (100%) response (90%) support response (70%) Benchmarking: Meets “Proficient” criteria and Identifies different approaches to Identifies different approaches to Approaches shows a keen insight into the benchmarking and describes each benchmarking but does not variety of benchmarking (90%) describe each (70%) approaches (100%) Does not determine whether the company is breaking even (0%) 5.4 Does not determine an optimal cost allocation method (0%) 5.4 Does not recommend how the method should be used by decision makers (0%) 5.4 Does not identify the pros and cons of implementing JIT (0%) 5.4 Does not explain how the JIT inventory system can benefit the organization (0%) 5.4 Does not identify the inventory management method that is recommended (0%) 5.4 Does not identify an advantage of benchmarking (0%) 5.4 Does not identify different approaches to benchmarking (0%) 5.4 Benchmarking: Benchmarking Method Meets “Proficient” criteria, and determination is well supported and plausible (100%) Alternative Costing Method: Main Characteristics Meets “Proficient” criteria and displays a keen insight into the variety of alternative costing systems (100%) Alternative Costing Method: Adopt Meets “Proficient” criteria and demonstrates a nuanced understanding of the relationship of the needs of a company and an alternative costing system (100%) Meets “Proficient” criteria, and determination is well supported and plausible (100%) Alternative Costing Method: Method Memo to Management: Findings Meets “Proficient” criteria, and description is exceptionally clear and contextualized (100%) Memo to Management: Business Planning Meets “Proficient” criteria, and recommendation is well supported and plausible (100%) Memo to Management: Business Operations Meets “Proficient” criteria, and recommendation uses industryspecific language to establish expertise (100%) Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy to read format (100%) Determines which benchmarking method management should adopt and justifies response (90%) Identifies alternative costing systems and describes the main characteristics of each (90%) Determines what the company should look for when deciding to adopt an alternative costing system and supports response with examples (90%) Determines whether the company should adopt the alternative costing method and defends response (90%) Describes the overall findings of analysis and identifies key elements that management should be aware of (90%) Makes recommendation to enhance business planning based on cost accounting analysis (90%) Recommends a performance tool to improve business operations based on cost accounting analysis (90%) Submission has no major errors related to citations, grammar, spelling, syntax, or organization (90%) Determines which benchmarking method management should adopt but does not justify response (70%) Identifies alternative costing systems but does not describe the main characteristics of each, or identification or description contain inaccuracies (70%) Determines what the company should look for when deciding to adopt an alternative costing system but does not support response with examples (70%) Determines whether the company should adopt the alternative costing method but does not defend response (70%) Describes the overall findings of analysis but does not identify key elements that management should be aware of (70%) Makes recommendation to enhance business planning, but recommendation is not based on cost accounting analysis (70%) Recommends a performance tool to improve business operations, but recommendation is not based on cost accounting analysis (70%) Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas (70%) Does not determine which benchmarking method management should adopt (0%) 5.4 Does not identify alternative costing systems (0%) 5.4 Does not determine what the company should look for when deciding to adopt an alternative costing system (0%) 5.4 Does not determine whether the company should adopt the alternative costing method (0%) 5.4 Does not describe the overall findings of analysis (0%) 5.4 Does not make recommendation to enhance planning (0%) 5.4 Does not recommend a performance tool to improve business operations (0%) 5.4 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas (0%) 2.8 Earned Total 100%

Tutor Answer

Xaib
School: Duke University

find attached

1

Running Head: HAMPSHIRE COMPANY CASE STUDY

Alternative Costing Method Analysis
Student Name
Subject
Professor Name
1st January 2018

2

HAMPSHIRE COMPANY CASE STUDY
Alternative Costing Method Analysis
Traditional costing is a method that can be defined as a way of assigning overhead costs
to the manufactured products and thus it is recommended that Hampshire Company utilizes this
method when it produces the stick umbrellas. The main point behind the traditional method is
that it assigns the indirect costs of the company to the products that are manufactured in regards
to the direct labor hours and the volume of production (Angelopoulos et al., 2017).In this
situation where the direct labor hours are used for the assignment of the overhead costs, it shows
that the labor hours are the main aspects that lead to the overhead costs experienced by the
company. According to my opinion, when Hampshire Company decides to produce the
Collapsible Umbrella, the best method for this is the activity-based costing since this method is
suitable for the determination of each and every task that is used in the production of a certain
product and thus assigning the required cost to that task. When this cost is established and
assigned to the tasks then it is finally assigned to the products that will utilize this tasks for their
production purposes.
According to ABC, a stick umbrella cost is $10.79 and collapsible umbrella cost is
$13.86 while in relation to the traditional method, the cost of a single stick umbrella is lowered
to $10.92 and that of a single collapsible umbrella is lowered to $11.12. This is a clear indication
that there is a great differentiation in terms of cost between the ABC and the traditional method.
The main reason that leads to the differentiation of this tw...

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Thanks, good work

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