Individual Assignments Chapter 4 Questions 13) The primary benefit of activity-based costing is that it has more accurate product

t costing. It also has more cost pools and it pushes to improve control over overhead costs. ABC drives to better the decisions of management. 14) The limitations of ABC are 1) higher analysis and measurement costs that accompany multiple activity centers and cost drivers; 2) the necessity still to allocate some costs arbitrarily.

Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2005). Managerial accounting: Tools for business decision-making (3rd ed.). Hoboken, NJ: John Wiley & Sons.

Individual Assignment Chapter 4 cont. E4-10 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) Number of models Number of purchase orders Number of square feet used for inventory Number of inspections Number of employees Machine hours Number of parts Number of employees Number of assets insured Direct labor hours Machine hours Number of appliances packaged

Individual Assignment Article Analysis Summary The article I chose is titled Pros and Cons of Process Costing by N. Nayab. The title basically tells you what the article is about. It explains how process costing is the opposite of activity-based costing (ABC). The advantages of process costing is that it brings together direct costs and distributes indirect costs to products for the months production and divides the total cost with the number of units to obtain the average cost per unit. Process costing is simple to use. It is inexpensive and doesnt waste any of the companys time or resources. This method makes it easy to get the average cost of a product and it gives precise estimates for customers. This article also explains the disadvantages of process costing. Process costing doesnt provide accurate estimates of costs when one process makes different types of the same item. It is not suitable for customized orders. Even with the pros and cons of process costing, it is still a useful for big companies that make homogeneous products.

Nayab, N. (2010). Pros and Cons of Process Costing. Bright Hub. Retrieved from http://www.brighthub.com/office/finance/articles/78918.aspx