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Activity-based cost management
Activity-based cost management
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Activity-based cost management
Running head: ACTIVITY BASED COSTING 1
ACTIVITY BASED COSTING 5
Activity based costing
Student’s name
University affiliation
Activity based costing
Activity-based costing refers to the situation by which companies tend to evaluate the costs of producing its products by understanding all the activities that are associated with the manufacturing process (Cokins, 2001). In other words, organizations tend to work to break down the entire the manufacturing process into various activities. Once the entire manufacturing process has been broken down into various activities, each activity is assigned a certain amount that is incurred for the entire manufacturing process to be complete. Therefore, activity-based costing helps the firm to identify the cost of each activity enabling it to implement techniques that can be used to reduce the cost of the entire manufacturing process.
If you implemented activity-based costing for your division, what additional costs would you consider as manufacturing costs?
Manufacturing of polythene bags requires that the company has to conduct different activities at the same to ensure that the products are of the right quality. In other words, different processes are associated with the production of the polythene bags. It is for this reason that the company should initiate the activity-based costing to help it evaluate the costs that are necessary for the production of the polythene bags. However, first and foremost, it is inevitable for the division to begin by analyzing all the activities that make up the entire manufacturing process. In other words, the first thing that should be done by the division is to take the time to assess all the activities that should be performed and that are related to the production of the polythene bags. Once this has been done, it becomes easy for the other employees to appreciate the existence of various roles and responsibilities that are directly related to the production of the polythene bags and making sure they are in that condition that will be accepted by the market.
However, other additional costs cannot be directly related to the production of the polythene bags but must be taken into consideration when summing up all that has been incurred by the company to attain its success. For instance, there is the issue to do with research that is conducted to allow the firm to understand the best ways that can be used to produce the bags. In other words, for the production of the polythene bags to be conducted in the best manner possible, there is the need for the division to choose a certain team that will be required to conduct market research and ensure the implementation of the best technological measures that can be initiated in producing high-quality commodities. Also, there are issues such as rent, telephone bills, water bills, transportation costs, and maintenance of the equipment. In other words, all these costs are taken into consideration when coming up with the specific costs that are associated with the production activities of the bags.
How would you allocate those costs to your division?
The allocation of the costs to the division should be carried out most strategically as a way of ensuring that the costs are well catered for by each department (Lanen, Anderson, & Maher, 2008). Therefore, the allocation of the costs should be conducted in a manner that allows the firm to ensure that all the activities earn the specific amounts that are genuine. For instance, the division should sum up all the costs that have been incurred and calculate the rate at which it consumes different resources. In other words, the allocation of the resources should be conducted by taking into consideration the specific amount of resources that are consumed by a certain activity and an individual. It results in the assurance of fairness and equity when seeking to realize how much should be ploughed in by the division. With this in mind, the firm will always ensure that no division caters for more costs than what it had consumed. Therefore, activity-based costing stands out to be more reliable than the other methods that are used to understand how to allocate the costs.
Would activity-based costing give you a more or less realistic picture of your division’s costs incurred to produce revenue?
Yes, the activity-based costing method is effective when it comes to providing a clear picture that relates to how most of the costs had been incurred to result in the realization of profits. In other words, activity-based costing provides an opportunity for the division to understand what has been invested in the individual activities to realize the specific revenue. Therefore, the method can be relied on since the costs incurred can be used to understand which activities resulted in high profits and which can are not effective and can be done away with considering that they are not profitable to the company.
If you choose not fully to implement activity-based costing, what would you have learned about your department’s costs that would help you operate more profitably?
First and foremost, I would have learnt that each activity in the corporation has an impact on the overall success of the firm. In other words, it would be clear that when a company decides to measure its success, it should not forget that each activity had a certain level of effort towards the achievement of the various targets (Ostwald, & McLaren, 2004). Moreover, I would have understood that it is important for a company to take into consideration all the activities when comparing the success of the firm and what has been invested in the past. Therefore, it is for this reason that it is evident that activity-based costing is of great value when dealing with organizational success.
References
Cokins, G. (2001). Activity-based cost management: an executive’s guide. New York: Wiley.
Lanen, W.N., Anderson, S. & Maher, M.W. (2008). Fundamentals of Cost Accounting.
McGraw Hill.
Ostwald, P.F., & McLaren, T.S. (2004). Cost Analysis and Estimating for Engineering and
Management. Prentice Hall.
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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