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Brewer, P.C., Garrison, R.H. & Noreen, E.W. (2013). Introduction to Managerial Accounting (6th). New York: McGraw-Hill Irwin. ISBN: 978007802Brewer, P.C., Garrison, R.H. & Noreen, E.W. (2013). Introduction to Managerial Accounting (6th). New York: McGraw-Hill Irwin. ISBN: 978007802
Q1. What is the difference between the product cost and period cost? Give some examples for each type
Q 2. What do you mean by Variable and Absorption Costing? Explain both with suitable example.
Q3. In cost accounting, direct costs are easily and economically traced to cost object. On the other hand, overheads cannot be economically traced to cost object. Therefore, allocating overheads is considered as the main problem in cost accounting, whereas traditional methods such as Single plantwide factory overhead rate method and Multiple production department factory overhead rate method have been used. In addition, developed methods such as Activity based costing method (ABC) has been used to enhance the allocation of overheads to cost object.
Students are required to criticize traditional methods and explain how is ABC being applied to a manufacturing company? What are the disadvantages of the ABC method?