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Hi
There has been a new part that has been added into the syallbus. The role of cost of accounting in strategy development and implementation relating to :
1. indirect and direct costs
2. overhead apportionment in full costing
3. activity based costing and planning and control.then give limitations.
I dont know if this would be tested, if so will it be possible to give you some calculations and perform both methods? Can you explain what they may mean by indirect costs? does it mean the costs that are not associated with the production of the products. i.e heat & Light, wages, rent, marketing and reaserach etc. and does direct costs mean costs such as raw materials, production, distrubution costs etc?
can you also explain the difference of ABC and apportionment costing. i cant see anything in my kaplan book that explain this.
Thank you.
You could be given calculations.
I always treat indirect as fixed.
See the article here for ABC example:
https://opentuition.com/?wpdmact=process&did=MTAyLmhvdGxpbms=
HI
Thanks i just read over the first question, where did the 30% fixed costs came from? 210000*30%?
thank you
The question tells you that:
“Set-up is very complex and it is estimated that 30% of fixed costs are set-up costs”
You are told that “The remaining 70% will be absorbed as present over 12,000 units.” Therefore, the original fixed cost absorption per unit are reduced to 70% under ABC (the 30% is for set-ups).
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