Assessment 5 Instructions: Applying Activity-Based Costing

Compute overhead rates and overhead costs for various jobs.

Introduction

Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.

Every activity in an organization can be calculated as a cost.

Activity-based systems provide managers with cost information for strategic decision making and planning that is not readily available with other costing methods.

Instructions

Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.

Use the Applying Activity-Based Costing Template [XLSX] to complete this assessment. This assessment allows you to practice applying activity-based costing (ABC) to classify activities on a unit level, batch level, product level, or facility level. You also compute activity overhead rates using ABC and determine overhead cost per unit, based on the given information.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:

• Competency 1: Analyze cost accounting systems.
  • Classify business activities as occurring at the unit level, batch level, product level, or facility level.
• Competency 2: Apply sound budgeting principles.
  • Compute activity overhead rates.
  • Compute the overhead rate.
• Competency 4: Analyze financial statements.
  • Compute the overhead costs that should be assigned to different jobs.
  • Compute the overhead cost per unit for different jobs.
  • Compute the overhead cost per unit for different jobs, using the overhead rate.
• Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
  • Communicate quantitative information accurately and effectively.