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I need 3 references in APA style citation for these information :

Q1 What process is used to assign costs in an ABC system? Provide numerical example.

(2.5 Marks)

Q2 How is relevant quantitative and qualitative information used in special order decisions? Explain and analyze using numerical example.

(2.5 Marks)

Answers:

Q1)

The Activity Costing System (ABC) is an accounting tool that can be used to identify the overall

cost of operations required to create a product. The ABC method allocates costs for any

manufacturing process including employees evaluating a product. To decide how much a product

is produced, many companies use the cost of products sold (COGS). However, COGS focuses on

costs directly and does not cover indirect expenses such as overhead. Some firms are taking

operating costs and investing them on all goods in equal measure. But, some products use more

operating costs than others, under this technique the cost of manufacturing each product is

inaccurate. It considers both the direct and overhead costs to produce each product with activity-based costs. Recognize, therefore, that different goods entail different indirect costs. It can more

effectively set prices by allocating both direct and overhead costs to each commodity. And the

costing process based on operation indicates, which overhead expenses it might reduce.

Activity-based costing implementation steps:

First step is, determine what activities to create a product are required.

Second step is, divide each activity into a separate price pool, a group of individual costs related to an

activity. Determine each cost pool's overall overhead. For instance, it could be a cost pool of its

own.

Third step is, assign each cost pool to the activity cost drivers. Costs are things that regulate cost

changes

such as units, hours, and parts. For instance, the number of products purchased depends on

buying costs.

Fourth step is, divide the overhead by the total cost drivers in any expense pool to achieve the cost driver

rate.

Fifth step is, calculate the number of hours of the activities used and increase the rate of cost driver in pieces, and units.

How to use the ABC system:

As business-based costing lowers the costs involved in the creation of a product, it has several uses in companies. For small enterprises, the cost-based operation is perfect for overhead decision-making and pricing.

Overhead decisions:

The ABC system explains how overhead is used, which lets one decide if certain production activities are required. You will discover new ways to do things if you find other tasks cost more than they should. Or, you can completely cut out the steps.

Product pricing:

The cost allocation helps people also set prices which creates a stable margin of profit for small businesses. They just disregard the other costs that can reduce your profit margins if you know the direct costs of your goods. In an ABC system, you can allocate costs to each operation during the manufacturing process so that a price that reflects how much you cost in producing a product is determined more accurately.

Activty Cost Pool	Cost Pool	Eastmiated Activitey	Activity Driver Rate	Cost Driver
Materials Handling Cost Machinening Finishing	$35,000 $66.000 $90.000	$7.000 $11.000 $5.000	$5.00 $6.00 $18.00	Per ton handled Per machine hour Per DLH

$191.000

Allocation of overhead

		Activeties consumed		Allocated overheads
Activety cost pool	Activety rate	Job 403	Job 890	Job 403	Job 890
Materials Handling Cost Machinening Finishing	$5.00 $6.00 $18.00	$4.500 $4.800 $2.200	$2,500 $6,200 $2,800	$22,500 $28,800 $39,600	$12,500 $37,200 $50,400
Total overhead allocated				$90,900	$100,100

	Job 403	Job 890
Direct Material Dircet Labor Overhead alocated	$45,000 $21,210 $90,900	$25,000 $28,500 $100,100
Total manufacrting cost	$157,110	$153,600

Q2)

Quantitative analysis:

A related quantitative analysis includes the comparison of the importance of the special order with the costs involved. All variable costs related to the order, incremental fixed exceeding charges and basic costs such as equipment and molding shall be included in these costs. As well, in the analysis of special order, the fixed overheads which do not change are not important.

Numerical example:

Incremental analysis of Special sales order decision

	Per Unit	Total Order (50,000 units)
Rvenue from special order Less: Variables expenses associated with order Variable manufacturing costs Contirbution margin Less: Additional fixed expenses associated with order Increase (decrease) in operating income from special order	$1.20 $0.80	$60,000 $40,000
	$0.40	$20,000 $3,000
		$17,000

The qualitative variables therefore often assume an equal role in the analysis of the particular order. The decision not only on quantitative theoretical grounds but also the qualitative determination of the decision to accept or deny the relevant order should. So, in this case, our decision will be to accept the special order. Special orders are typically receivable from production and distribution firms and are usually a single order for products or services at a low price that do not impact regular sales over a limited period of time.

The following are some of the factors to be considered in accepting the special order:

1- The capacity required to support out all the special order

2- Whether the buyer's price contains the cost of production of goods

3-The role in the analysis of fixed costs

4-Qualitative factors

5. Whether the order violates the Robinson-Patman Act and other regulations on equal pricing