Effect of Alternative Costing Systems on Decisions

question 97

Essay

Effect of alternative costing systems on decisions
Traditional volume-based product costing systems and activity-based costing systems have been presented as alternative methods to use to determine product costs.
i. In a traditional volume-based costing system, costs are classified as fixed and variable. In an activity-based costing system, costs are classified into four categories. List those four categories.
ii. Is it possible for the quantitative analysis to differ depending on whether data is developed from a traditional volume-based costing system or an activity-based costing system? If so, explain which of the four categories of cost in question (i) are likely to cause the difference.

Calculate the optimal workforce levels based on seasonal demand.

Evaluate the effectiveness of promotional strategies in different demand periods.

Identify the impact of promotions on inventory levels.

Understand the concept of forward buying and its impact on supply chain management.

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Definitions:

Protection

An alternative term for trade protection; policies that limit imports.

Foreign Trade

Involves the exchange of goods and services between countries, can be through importing or exporting.

Import Tariffs

Taxes imposed by a government on goods and services imported from other countries to protect domestic industries from foreign competition.

Quotas

Quotas are government-imposed trade restrictions that limit the number or monetary value of goods that can be imported or exported during a specific time period.