Develop your understanding of activity based costing
CASE STUDY : CAMBDEN CAKES
ASSESSMENT REQUIREMENTS
This assessment has four primary aims:
1. To provide you with an opportunity to develop your understanding of Activity Based Costing;
2. To provide you with the means to further refine your analysis and problem solving skills;
3. To provide you with an opportunity to develop team-work capabilities;
4. Provide you with an opportunity to develop your report writing skills.
5. To provide you an understanding on how accounting operating as a social practice.
PART 1-
1. A summary of the background and main issues of the case.
2. A DETAILED explanation of the following:
a. The specific limitations you have identified with Cambden Cakes’ existing costing system,
b. The potential consequences to Cambden Cakes of these limitations.
3. An explanation of why Activity Based Costing would be a more appropriate costing system for Cambden Cakes, compared to its existing system.
4. A discussion of the benefits Cambden Cakes would derive from introducing an Activity Based Costing system. In your discussion explain how Activity Based Costing would overcome the consequences you identified in part 2. Ensure that you relate your discussion specifically to Cambden Cakes’ particular situation. Do not simply discuss the benefits of ABC generally.
5. Using the data provided in the case, calculate the total product costs of the two types of cakes under;
i) Cambden Cakes’ original costing system;
ii) The revised ABC costing system.
iii) A DETAILED explanation of why the product costs you have calculated for each product in requirement 5- differ under; Cambden Cakes’ original costing system;The revised ABC costing system.
6. A DETAILED explanation of the issues Cambden Cakes needs to consider to ensure a successful implementation of the ABC system.
PART 2-
For this part of the assignment, your group required to gain an access to an existing Business (Small/Medium), agreed with your tutor and complete the following tasks:
1. Outline the business that your group selected – Objectives, market share, location, customers, nature of competition, sales and number of employees and the product costing system)
2. Analyse the product or service costing system of the Business ( Eg – simple or ABC or any other methods).
3. How the product or service quality is maintained – what measures are in place?
4. How the inventory management system works in the business (Supply chain, local/international/storage etc.)
5. Identify and discuss the Cost Accounting system as a ‘Social Practice’ in your selected Business.
