Explore BrainMass
Share

Cost drivers and activity based costing

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

I need help in answering these questions. I need a word count of 200 for each questions.

DQ 2 What are cost drivers? How do cost drivers relate to cost pools? What are some cost pools? Name two or three different cost drivers for each of these cost pools.

DQ 1 What activity-based costing? What are some of the key elements of activity-based costing? How does this method differ from a more traditional costing method?
Thank you so much for your

© BrainMass Inc. brainmass.com October 25, 2018, 1:35 am ad1c9bdddf
https://brainmass.com/business/financial-accounting-bookkeeping/cost-drivers-and-activity-based-costing-268204

Solution Preview

DQ 2 What are cost drivers? How do cost drivers relate to cost pools? What are some cost pools? Name two or three different cost drivers for each of these cost pools.

Cost drivers are as the name indicates which drive the cost. What it means is that the total cost would change as the volume of cost driver changes. Cost pools are the activities for which we accumulate the costs. In a production environment, overhead costs are accumulated in different cost pools which are the activities which are carried out in the production environment. Cost drivers are which drive the costs in these cost pools. For example, some cost pools could be setup costs, material movement costs, ordering materials. These are ...

Solution Summary

The solution explains cost drivers and activity based costing

$2.19
See Also This Related BrainMass Solution

Cost drivers and activity-based costing

Andrea Boss, Inc. manufactures five models of kitchen appliances at its Vista plant.

The company is installing activity-based costing and has identified the following activities performed at its Vista plant.

1. Designing new models.
2. Purchasing raw materials and parts.
3. Receiving and inspecting raw materials and parts.
4. Storing and managing inventory.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Maintaining and repairing machinery and equipment.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Training all employees of the company.
12. Painting and packaging finished appliances.

Having analyzed its Vista plant operations for purposes of installing activity-based costing, Andrea Boss, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead costs to its products.

Instructions

Using the activities listed above, identify for each activity one or more cost drivers that might be used to assign overhead to Andrea Boss's five products.

View Full Posting Details