Calculate the production overheads to be absorbed by one unit of each of the products using the following costing methods. An activity based costing approach, using suitable cost drivers to trace overheads to products
【参考答案及解析】
ABC approach These figures suggest that, with traditional absorption costing, Product M absorbs an 'unfair' amount of overhead costs using a direct labour hour absorption rate. If overhead costs are absorbed accordingly for each activity, based on the cost drivers for the activity, the resulting costs are more 'fair'.
ABC approach These figures suggest that, with traditional absorption costing, Product M absorbs an 'unfair' amount of overhead costs using a direct labour hour absorption rate. If overhead costs are absorbed accordingly for each activity, based on the cost drivers for the activity, the resulting costs are more 'fair'.