ACCT 202 CASE #2-ACTIVITY BASED COSTING 25 Points Due March 18TH at.pdf

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ACCT 202 CASE \#2-ACTIVITY BASED COSTING 25 Points Due: March 18TH at 11:59pm Dooley Corporation makes two types of ladders; short and tall. Currently, Dooley allocates overhead to the products using a plantwide overhead rate using direct labor-hours as the activity base. A pricing consultant recently had recommended that Dooley use an Activity Based Cost system for allocating overhead and identified the below activities, cost drivers, estimated costs, and estimated cost driver units for the upcoming year: In addition, management estimated 2,000 direct labor-hours for year 5 . Assume that the following cost driver volumes occurred in February, year 5 : Required: a. Compute the predetermined overhead rate using direct labor- hours as the activity base. b. Compute the activity rates for each of the activities suggested by the consultant c. Compute the cost per unit (for both short and tall ladders) using the plantwide overhead rate. d. Compute the cost per unit (for both short and tall ladders) using Activity Based Costing e. Management has seen the above results and wants an explanation for the discrepancy between product costs using the plantwide rate and Activity Based Costing. Write a 2 paragraph response to management, which includes your recommendation as to whether we should take the consultant's advice or not. Include the advantages and disadvantages of implementing Activity Based Costing..

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Part 1 1) You are providing a review of contractor bids for a component of your upcoming project. What can be done to determine whether or not a vendor’s bid is reasonable? To decide whether the vendor's bid is sensible I would check for the following steps: • The bid ought to be in accordance with the project estimate cost and ought to comply with it • The temporary worker presenting the bid ought to be genuine and have great reputation • The bid ought to pursue all the legitimate prerequisites • The bid ought to be legitimate for the project and should fulfill all of the segments • The bid should also pursue every one of the terms and conditions referenced for the venture 2) Describe the conditions for which parametric, analogous and bottom up estimation techniques work best, and provide 2 examples in support of each method. Parametric estimation: It is an estimation of cost, time or risk that is based on a calculation or algorithm. As the name suggests, parametric estimates are based on parameters that define the complexity, risk and costs of a program, project, service, process or activity. E.g. 1. A moving company estimates the price of an office move using a base cost and variable cost based on the number of employees and distance. Unique complexities such as moving an air conditioning system is added as a separate cost. This base cost is multiplied by surcharges for moving to a multi-floor premise and working on a weekend. 2. The expense to construct a current shopping complex can be referred and we can add the resources to decrease the time dependent on past information and scientific estimations. Analogous Estimation: This type of estimation depends on the past historical data as well as the performance of the project team E.g. 1. In the event that an organization has undertaken advancement of an application and delivered it effectively, this can be utilized for estimation if similar application needs be created 2. For example, if it cost $7,100 to develop a website a few months ago and you are responsible for developing a new similar website, you estimate it to cost $7,100. Bottom-up Estimation: This type of estimation can be done by breaking the entire project into modules and considering them individually. E.g. 1. Individual managers must first create their own budgets, referencing past budgets and spending patterns while incorporating cost projections for the upcoming fiscal year. Upper-level managers and executives must then review all the budgets that managers submit, combining them to determine totals. 2.A project which requires high amount of detail and accuracy 3.Why is a cost management plan important? How does the plan benefit the project manager? Cost management is the way toward assessing, allotting, and controlling the expenses in a project. It enables a business to anticipate coming costs so as to diminish its odds going over spending plan. It is one of the most important and essential part of the project ...

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