Mini-Project 1 Applying Ch. 1, 2, & 4 to \"Nike\" MGMT 30:3 One week later... Th
ID: 2331772 • Letter: M
Question
Mini-Project 1 Applying Ch. 1, 2, & 4 to "Nike" MGMT 30:3 One week later... The presentation went very well! You are confident that the Accounting Dept. and the key managers are now more informed about the basics of managerial accounting. With this foundation in place, you've decided to start examining some of the basic managerial accounting processes being used by Nike's Sports Gear/Sports Accessories Department. You suspect that this department should be using Activity Based Costing (ABC) rather than a single predetermined overhead rate (POHR) becaus... 9) (Mark an "X" by the reasons you believe ABC would be better for this department from the list below) ...profits have been lower than expected in the department even though the records show that the products with the lowest costs and high sales price (and thus highest profit) are being sold, according to current system .there is significant variation in volume and complexity between products in the department .overhead costs are a small part of total manufacturing costs in the department 10) To see if your suspicion is correct, you decide to examine the costs under the current system (which uses a single POHRL ys the costs under an ABC system for the department's most popular product:Explanation / Answer
"there is significant variation in volume and complexity between products in the department" is the right choice.
as per activity based costing, cost is allocated to different products as per their volume and requirement.
It is similar to giving weights to activities and applying weighted average method rather than simply doing their simple average. the weights are allocated as per the given data of consumption of resources for producing a particular product.