Describe the manner in which a full absorption costing income statement is developed. 10. Describe the manner in which a direct (or variable) costing income statement is developed. 11. Prepare a full absorption costing income statement. Units 5,000 46 Setup costs 34,243 Number of setups 240 143 Designing 123,132 Designer hours 1,000 123 Product testing 24,234 Testing hours 500 48 Rent 1,234,233 Labor cost 1,645,644 75 Once the order was ready for packaging, Aaron gave you a summary of total cost. 6. Explain the difference between perpetual and periodic systems. 7. Describe four functions of information or cost accounting systems. 8. Discuss the characteristics and requirements of the four functions referred to in objective 7. 9. This chapter builds a foundation for developing an operational cost accounting system by describing the main components of such a system. In addition, the chapter includes discussions of the various functions of information systems and illustrations of the basic types of financial results that are. Activity-based costing is a method of assigning indirect costs to products and services which involves finding cost of each activity involved in the production process and assigning costs to each product based on its consumption of each activity. CVP analysis has following assumptions: All cost can be categorized as variable or fixed. Sales price per unit, variable cost per unit and total fixed cost are constant. All units produced are sold. Where the problem involves mixed costs, they must be split into their. As we shall see is this chapter and subsequent chapters, the Amount of net income can vary substantially for different inventory valuation methods. The four methods are described below. A symbolic overview of the four methods is provided in Exhibit 2-3. Interwood's total budgeted manufacturing overheads cost for the current year is 5,404,639 and budgeted total labor hours are 20,000. Alex applied traditional costing method during all of the 10 years period, and based the pre-determined overhead rate on total labor hours. Next, you calculated the total cost that goes into each activity, identified the cost driver that is most relevant to each activity and calculated the activity rate. The results are summarized below: Activity A (in ) Relevant Cost Driver B CA/B (in ) Production of. Activity-based costing is more refined approach to costing products and services than the traditional costing method. It involves the following steps: Identification of activities involved in the production process; Classification of each activity according to the cost hierarchy (i.e.