Assignment 1: Absorption, Variable, and Activity Based Costing
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ActivityBasedCostingPeersPosting.docxActivity Based Costing Peers Posting
1.) Tamara Marquis posted Oct 21, 2017 1:24 PM
If Activity Based Costing (ABC) was implemented production of the digital scales additional cost that I would consider manufacturing costs would include the team that tests the tempered glass at the beginning of production, and the team that tests scales for accurate calibration at the end of production. These costs would be allocated based on the size of scale and degree of accuracy. Larger scales will be using more tempered glass therefore a larger portion of cost of the team testing the tempered glass would be assigned to them. Smaller scales will be used to measure smaller weight and will need a higher grade of accuracy therefore a larger portion of the cost of the team testing for accurate calibration be applied to them.
Activity-based costing gives a more realistic picture of my divisions costs incurred to produce revenue because it breaks down the cost associated with the manufacturing costs by the varying products. This gives my division a more accurate idea of how much each size of scale cost to produce. If I decide not to activity-based costing I would have learned which products are incurring more costs and at what stage they are incurring these costs. This information would allow need to operate more profitably because I would have a better understanding of how much manufacturing overhead product is incurring.
2.) Tramaine Ashford posted Oct 18, 2017 5:06 PM
When it pertains to manufacturing costs the additional costs of running the division would be all rent/mortgage and utilities, along with the cost of productivity, goods/services and parts (including any shipping fee's), employee work labor and the overall cost to run the division. I would find the total cost of goods and services needed and order. Make sure work productivity is where it is needed to be, along with tie in with what is needed the supply and demand and weigh it out. Therefore, when it's time to distribute I will know what is needed, what have been done and what needs to be done, to get it done. The cost of parts and employee's are a more realistic approach to the revenue that would be generated in order to produce revenue. I could weigh in the costs and benefits to see what the outcome would be. The production that would be actually being produced as well as the goods/services generated will help me get a more feasible idea of the profitability that the division will occur.
