Acc/561 - Week 4 Costing Methods Essay - 712 Words

Week 4: Costing Methods The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise. Management Strategies A virtual corporation is described as a technology-linked network of companies, suppliers, and customers that are used by a company to outsource non-strategic business functions (Hershkovitz, 2012). The management of Super Bakery, Inc. identified that they could reduce their costs in permanent staff, fixed assets, and working capital (Kimmel,†¦show more content†¦This type of cost system further allows the activities to be specifically tracked in each of the company’s markets. In a virtual corporation environment, I believe the ABC method to be the most ideal for accurately tracking the costs involved in manufacturing, storing, delivery, and sales. For Super Bakery, Inc. the addition of multiple outsourced companies to their processes meets the criteria of products with manufacturing complexity that requires differing degrees of support services (Kimmel, Weygandt, Kieso, 2009, p. 876). As a result, I agree with Super Bakery Inc.’s decision to implement an ABC system. Options for Job Order Cost or Process Order Cost Systems I do not believe that either a job order or process order cost system would work for Super Bakery, Inc. Job order cost systems are based on one â€Å"work in process† account and a determination of total manufacturing costs at job completion. Because Super Bakery, Inc. is outsourcing many of the product production functions, they will not be able to obtain accurate costs for a particular job. As a result, they will again be forced to â€Å"average† the costs for multiple jobs which will result in an inaccurate overhead assessment. Process order cost systems are based on multiple work in process accounts and determine total manufacturing costs at the end of a time period. Multiple outsourcedShow MoreRelatedAcc/561 Sample Final Examination1215 Words   |  5 PagesACC/561 Sample Final Examination Week One: Decision Making Objective: Explain the role of budgets and performance reports in the management decision-making process. 1. The Hola Company held a Christmas party. The company expected attendance of 100 persons and prepared the following budget: Hotel room rental $600 Food 500 Entertainment 800 Decorations 300 Totals $2,200 After all bills for the party were paid, the total cameRead MoreAcc/561 Sample Final Examination 21376 Words   |  6 PagesACC/561 Sample Final Examination This Sample Examination represents the Final Examination that students complete in Week Six. 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