Managing Unused Capacity Concept in Cost Accounting by Myhomeworkhelp.com is Very Effective
We, at myhomeworkhelp.com have devised a strategy to study how activity-based cost systems are more efficient than traditional cost systems. Traditional cost systems do not take into account unused capacity for overhead costs. Managing unused capacity homework help holds much significance in studying cost accounting.
The critical analysis will enable you to:
An activity-based costing evaluates cost of resources required to produce outputs.The below equation explains relationship in managing unused capacity assignment help.
Activity availability = activity usage + unused capacity
The above example clarifies the basic idea of managing unused capacity homework help.
Rewriting the formula
$25000 (cost supplied) = $20000 (cost used) + $5000 (unused capacity)
A financial statement reveals the total cost as $25000 while the cost incurred by activity-based approach is $20000.
Many firms consider the cost of resources i.e. $25000 a fixed cost. Although it does hold good in short-run, the logic fails to impress in the long-run. Relevant factors is at a risk of undergoing changes like increase or decrease in the number of resources and in the total number of purchase orders processed.
Some experts of accountancy term managing unused capacity assignment help as volume of variance. Counter-arguments are provided by the other segment is as follows:
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