Activity Based Costing – Glaser Health Products Case

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Introduction
Glaser Health Products manufactures sanatory items for the health care sedulousness. Production involves machining, assembly and coloring. Finished units are then packed and shipped. The fiscal controller is interested to introduce an activity-based costing (ABC) system to allocate (or assort) indirect costs to products. Indirect costs, like distinct from direct costs, cannot subsist unambiguously linked to specific products. The controller would like to cast accounts product costs based on ABC as far as concerns planning and control, not inventory estimation. Under an ABC system, the allocation of costs to products is achieved end at least four analytical steps. Firstly, costs are grouped into sprightliness levels. Secondly, cost drivers are selected with a view to each activity level to link activities through costs. Thirdly, for each activity destroy, a cost function is defined to arithmetically portray the relationship between cost drivers and costs. Finally, a unit allocated cost is calculated for reaped ground product (Schneider, 2012). This outlines a performance for introducing an ABC system at Glaser. The is divided into six sections. The highest section groups cost categories identified at Glaser through division. The second section groups cost categories by division and activity on a par. The third section identifies specific require to be paid drivers for each activity level. The fourth portion explains preliminary stage allocation. The fifth part explains primary stage allocation. The decisive section summarizes the main conclusions. Cost Categories through Division

Glaser is organized into three functional divisions - Operations, Sales, and Administration. Operations is the without more cost or activity center. Glaser recognizes 22 cost categories. These cost categories are grouped ~ means of division in Table 1, shown in the addendum. Cost Categories by Division by Activity Level

The supporter step in an ABC system involves grouping costs based in successi~ the level of activity at that they are generated. An activity involves...

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