# Cost Drivers and Activity-Based Costing

Anonymous
account_balance_wallet \$35

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

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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Anonymous
Thanks, good work

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