02 Jul Costing systems Memo
uestion Description
Required:
Write a 1-2 page memo, as the accountant of Brunners Corp, addressed to Jeri Cooper describing your analysis and the outcomes. Make sure you respond to the following items:
1.Provide a total cost estimate using the current traditional costing system, where overhead is allocated based on direct labor hours (Brunners expects to use a total of 40,000 direct labor hours this year).
2.Provide a total cost estimate using the activity based costing system proposed by the ABC implementation team.
3.Explain to Jeri which cost estimate would be more accurate, and why.
4.Use activity based management to respond to Jeri’s question about potential cost inefficiencies.
5.Evaluate the ABC system as it currently stands. Explain what change(s) you expect the ABC implementation team to make, and how that could affect your cost estimates.
Attachment preview
Midterm Part 2: Brunners Corp.
Jeri Cooper, the sales manager of Brunners Corporation, is getting worried. Her last three bids were rejected in favor of a bid from a new competitor to the market. Now, she is putting together a bid for a potential new customer, and she wants to make sure the price is competitive, but still profitable. As the managerial accountant at Brunners, your job is to help Jeri prepare bids by providing the most accurate cost estimates.
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