Answer:
Activity based costing says that we must not absorb the Overhead cost on the basis of one absorption basis as this overhead is not generated as a result of this absorption basis(Machine hrs or labor hours). This use of one absorption basis is inappropriate (not fair allocation). We must find a fair basis that drives this cost. Upon investigation the management found that the total overhead cost suppose which is $1,050,000 can be divided into three cost pools (parts) and each part has a cost driver(a basis of allocation) which can be used to allocate this cost.The costs in the ABC system are allocated to unit product on more fair basis than the tradition absorption costing which only assume one fair basis for allocation of overhead costs. ABC criticizes traditional costing technique for using only one basis for absorption of Overheads.
Now following example will help you in understanding the difference between Absorptiion Costing and Activity based costing.
Suppose both Mr. A and Mr. B drank 5 glasses of juices. Each glass of juice costs $4. According to the Traditional absorption costing technique each individual must pay:
(5 Juices/2)*$4=$10
But ABC says its unfair, use a more appropriate basis for cost allocation. So upon investigating we came to know that Mr. A drank 3 glasses of juice and Mr. B drank 2 glasses of juice. So Mr. A must pay $12(3*$4) and Mr. B must pay $8(2*$4). This is more appropriate or fair basis of absorbing the overhead cost to each individual and is Activity Based Costing.
Marketing processes the quesion is not complite
Answer:
is a level stream of equal payments through time.
true. The payments will remain at the same levle for the entire period of the annuity until maturity.
Explanation:
is a debt instrument that pays no interest.
FALSE the annuity does provide interest for each period when is prepared.
Has no value.
FALSE the annuity can be saled in the secondary market pretty much anitime.
is a stream of payments that varies with current market interest.
FALSE the payment will be the same regardless of the interest rate.
Sarah is demonstrating a critical thinking. Critical
thinking can be defined as the awakening of intellect to study itself. It is
also the ability to think and analyze fasts to form a judgement. Critical
thinking also refers as the ability to think clearly and rationally regarding
what to do and what to believe.
Answer:
Excluded from GDP
The production of the set of tires does not included on the GDP as it is referred to as an intermediate goods which are used to produce the final product (which is the two door coupe, in this case).
Explanation:
Gross domestic Production (GDP) represent the total production of a nation within its domestic borders. Some of the items that are excluded in GDP include: sales of goods that were produced outside the domestic borders of the country, intermediate goods that are used to produce other final goods, sales of used goods, illegal sales of goods and services (black market) and transfer payments made by the government
