Direct labor or machine hours may not be the appropriate cost driver for overhead in...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activitybased costing which uses multiple drivers items that consume resources rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct causeeffect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below are a sample of possible cost pools for Waterways. tableAssemblingPayrollBillingPlant supervisionDigging trenches,Product designJanitorialPurchasing materialsMachine maintenance,SellingMachine setups,TestingMoldingWelding Packaging HELP WITH THESE THREE QUESTIONS: For each of the above cost pools, what would be the likely activity cost driver? The results of ABC can provide a more accurate picture of costs. Discuss the value of Waterways using this system to determine overhead costs. How might using ABC affect decision making at Waterways? 
Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activitybased costing which uses multiple drivers items that consume resources rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct causeeffect relationship in its applied overhead costs.
Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below are a sample of possible cost pools for Waterways.
tableAssemblingPayrollBillingPlant supervisionDigging trenches,Product designJanitorialPurchasing materialsMachine maintenance,SellingMachine setups,TestingMoldingWelding
Packaging
HELP WITH THESE THREE QUESTIONS:
For each of the above cost pools, what
would be the likely activity cost driver?
The results of ABC can provide a more accurate picture of costs. Discuss the value of Waterways using this system to determine overhead costs.
How might using ABC affect decision making at Waterways?
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.