Abc You Beauty

Activity-Based Costing Example Lisa Horton, Production Manager for Beautiful You climb circumspection crops, had just finished interpretation several(prenominal) articles on produce line simplification and was not pleased. The articles documented how several major(ip) companies achieved cost savings by simplifying crossroad lines or fall the number of unique inputs or parts from existing product lines. I wish our marketing department had read these articles idea Lisa. In the past year, Beautiful You had introduced a petty blockade (1.5 oz.) of soap to complement the Little (3.0 oz.) and big (5.0 oz.) bars. Sales of the lilliputian bar had been disappointing. At a soap team system meeting, Joe Johnson, the accountant assigned to the soap team, recommended concentrating resources on the minute and epical bars and reducing or eliminating production of the Little bars. Joe presented the reading shown in Exhibits 1 and 2. As you can see, our be for t he Tiny and Big bars are less than both the drill average and our major competitor said Joe as he referred to Exhibit 2. Lisa looked at the delve and overhead cost of the trey bars of soap. Im certainly not an accountant, she said, but it doesnt appear appropriate to allocate the total job cost based on direct labor hours. 35 of our 125 employees are managers.

Furthermore, Ive seen the way the remaining employees categorise their time, and is pretty much a joke. The labor hours certainly sham thint capture the set up costs. In addition, it appears positive to allocate the remaining $4,295,0 00 of cost based on the rule book of bars p! roduced. Joe suggested performing an activity-based costing subscribe to to determine whether collateral costs were appropriately allocated to the different products. Joe explained that infra ABC, costs are associated with activities call for to produce the products instead of allocating the costs directly to the products. at once the costs of the activities are determined, the activities required to...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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