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Essay text:
This labor-based charge is added to the materials cost to calculate the total job cost. TBU works for internal customers only and not allowed to seek outside work. Management is concerned that the current costing system is causing other business units to send it work that does not use TBU's strengths to the company's overall advantage.
We will investigate the current Functional-Based Costing System (FBC) to determine if management's concerns are justified. We accomplish this by the following process:
· Explain the steps to compute job costing under the current standard costing system (Functional-Based Costing system - FBC)
· Provide a recommendation for another cost accounting system that recognizes additional differences among jobs (Activity Based Costing ? ABC)
· Compute and explain the steps for job costing under the newly recommended costing system (Activity Based Costing ? ABC)
· Explain differences in decision making at TBU
· Identify TBY's internal customers that might be influenced by use of the alternative cost system...
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