Purchase Solution

Compare ABC to department-based costing system; advantages o

Not what you're looking for?

Ask Custom Question

Please answer the two questions below:

-Explain how activity-based costing system is different from department-based costing system.

-In your opinion, what are the advantages/disadvantages of activity and department costing systems?

Purchase this Solution
Solution Summary

Response is 391 words with advantages and disadvantages in bullet format so you can put in your own words.

Solution Preview

Explain how activity-based costing system is different from department-based costing system.

Department based costing systems takes costs within departments and allocates them typically on one cost driver (traditional method). Service departments are allocated to production departments based on a logical cost driver for that department. There are several methods to do this but the process is basically to allocate based on one cost driver.

Example: The costs of the cafeteria are allocated to production departments based on head count.

Activity-based costing systems take costs and sort them into homogeneous costing pools, where the costs in each ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

View More Free Quizzes
Related BrainMass Solutions

  • Allocation of IT Costs and ABC Costing

    4.Compare and contrast ABC Costing and Lean Manufacturing. (Answers to questions and references provided in detail in APA Format).

  • ABC Costing; Examples from Manufacturing and Hospital Settings

    It seems logical that the more computers in the department, the more the IT department will have to use its resources to serve that department. An ABC costing system is undeniably more accurate when implemented correctly.

  • Comparison Between ABC and Traditional Costing

    An ABC system would result in more accurate cost estimates than a traditional costing system because resource consumption estimates are generated based on various types of activities that occur in the manufacturing process and how much each department

  • Product and Activity Based Costing: Two Activity Example

    Activity based costing system: Meaning: Activity-Based Costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to products and services according to the actual consumption by each in order

  • Activity-Based Costing (ABC) and traditional two-stage method

    The firm use activity based costing system rather than using the traditional costing system as the ABC costing allocates the overhead scientifically i.e., the overheads are allocated to different products in direct proportion to the resources consumed

  • Cost Accounting Problems

    Has this serve to discourage companies who probably need to use ABC from going in that direction? Or, they just do not want to bother to try ABC? ABC or activity-based costing is not disruptive to the financial accounting system.

  • Variable manufacturing overhead

    AP's managers are wondering if they should further refine the department-by department costing system into an ABC system by identifying different activities within each department.

  • Accounting: CVP Method and ABC Systems

    Therefore, organization should have sound coding system to allocate the costs to the resources in ABC costing. 2.

  • Cost Accounting - ABC Case Study

    One of the best ways to convince management of the advantages of using ABC to allocate overhead costs is to present examples on how erroneous costing (resulting from improper use of volume based costing rather than the ABC method) results to erroneous

View More Related Solutions