Activity Based Costing Essay Example | Topics and Well Written Essays - 1000 words

military action Based appealing - Essay ExampleMore than that, it traces back the cost to the activities and processes (Heisinger, 2010). Above all, use of goods and services of employment based costing (ABC) method especially in companies with diverse centers and dispersion channels has proven to be suitable. Unlike other methods, the activity based costing (ABC) method ensures that there exists a direct correlation coefficient between the related overhead cost and the occurrence of an activity (Chang, 2010). Without doubt, the marketing manager stopping point to use the activity based costing (ABC) method, as a way of critically analyzing the customer throw and distribution costs is more suitable, as compared to taking the store with the highest contribution margin ratio.... Without doubt, the marketing manager decision to use the activity based costing (ABC) method, as a way of critically analyzing the customer support and distribution costs is more suitable, as compared to taking the store with the highest contribution margin ratio. Workings Cost allocation based on revenue core revenue is $ 500,000 1) discussion section Stores = $150,000/ $500,000 = 0.3 2) Specialty Shops = $100,000/ 500,000 = 0.2 3) seat Shops = $250,000/500,000 = 0.5 (Bragg, 2002) i) inconsistent production cost is $150,000 Department Stores = $150,000 * 0.3= $45,000 Specialty Shops = $150,000 * 0.2 = $ 30,000 Gift Shops = $150,000 * 0.5 = $ 75,000 ii) Production Overhead $120,000 Department Stores = $120,000 * 0.3= $36,000 Specialty Shops = $120,000 * 0.2 = $ 24,000 Gift Shops = $120,000 * 0.5 = $ 60,000 iii) Selling & Distribution Costs $180,000 Department Stores = $180,000 * 0.3= $54,000 Specialty Shops = $180,000 * 0.2 = $ 36,000 Gift Shops = $180,000 * 0.5 = $ 90,000 Activity Based Costing (ABC). Total costs/No of orders places $40,000 10 90 900 Cost drive is the number of orders placed Department Stores = $40,000 * 10/ atomic number 19= $400 Specialty Shops = $40,000 * 9 0/1000 = $ 3,600 Gift Shops = $40,000 * 900/1000 = $ 36,000 (Finkler, Ward & Baker, 2007) Total costs/No of sales calls 80,000 5 195 800 Cost drive is the number of sales calls Department Stores = $80,000 * 5/1000= $400 Specialty Shops = $80,000 * 195/1000 = $ 15,600 Gift Shops = $80,000 * 800/1000 = $ 64,000 Total costs/No of shipments 60,000 20 480 1,000 Department Stores = $60,000 * 20/1500= $800 Specialty Shops = $60,000 * 480/1500 = $ 19,200 Gift Shops = $60,000 * 1000/1500 = $ 40,000 Allocation of other costs is based on the