Essay Database

Questions 2-4<Tab/> The estimated costs calculated using the activity-based costing method is very different from the existing standard unit costs and the revised unit costs. Exhibit 3 uses the traditional cost allocation system, which allocates all costs based on measures of volume. In the standard unit costs, Destin Brass uses direct labor as the only cost driver, which rarely meets the cause-effect standard wanted in cost allocation. Exhibit 4 is similar to …

…the following month, assuming quantities produced and sold, activities, and costs were all at standard, the profit reported under the new system would be $540,260.00, and under the present system would be $539,180.00. There is only a difference of $1,080. Destin Brass will not see any major difference in profit in the short run; in this case it's over a period of one month. But in the long run, they will definitely see major changes in their profits.