Question: Required: 1) Perform overhead analysis systematically firstly based on traditional costing system. The overhead analysis under traditional costing system involves two-stage allocation process by assigning all manufacturing overheads to production and service cost centres, and followed by reallocating the costs assigned to service cost centres to production cost centres. Provide the calculations of the manufacturing costs assigned to the two products (Simple luggage and Complex luggage).
2) Perform again the overhead analysis using Activity-based costing (ABC) system. The overhead analysis under ABC system involves assigning costs to activity cost centres. Provide the calculations of the manufacturing costs assigned to the two products (Simple luggage and Complex luggage) based on ABC system.
3) Compare the product costs calculated under the traditional costing system and ABC system and explain the rationale behind the differences in product costs calculated under the two costing systems.
4) Analyse the cost versus benefit considerations in adopting ABC system in Happy Traveller Ltd.
5) Explain in details in what ways the ABC cost management can be applied in Happy Traveller Ltd besides assigning costs to its products.
Report: There are four sections
- Introduction
- Explain the purpose of this report
- The significance of traditional costing systems and activity based costing Cite references to support your discussion in the section
- Discussion
For Happy Traveller Ltd case, show the workings of the above requirements 1) to 3)
Requirement 1) traditional costing system 20%
Requirement 2) ABC 30%
Requirement 3) compare traditional costing system and ABC 10%
Conclusion: For Happy Traveller Ltd case, give answers for the above requirements 4) to 5)
Requirement 4) Analysis the cost and benefit 10%
Requirement 5) Apply ABC to the company 5%
Information related to above question is enclosed below:
Attachment:- Case.rar