Finance assignment Essay Example | Topics and Well Written Essays - 1250 words

Finance assignment - Essay Example s is used for production scheduling; number of set-ups is also used for setting up activity; and number of direct labour hours is used for other indirect cost since case facts required cost river for â€Å"other indirect cost† to be the % proportion that they represent relative to the best of the indirect cost. This researcher has interpreted that the best basis is still the number of direct labour hours in the absence of other cost driver that could be used for other indirect cost. In applying the ABC approach for Agostino plc, there was a need to get first the estimated number cost driver units and the estimated share of activities from the unallocated total direct cost. The estimated number of cost driver units was based on the given total annual activity data which can be assumed to stay constant for next year from the three distinct services provided by the company. The data is as summarized in Table I below: It may be observed from above about the need to identify the services for purpose of applying ABC for Agostino plc. It may be further observed that the real issue on the use of ABC costing in on how to have a more rational basis of allocation for purposes of enhancing control on the indirect cost of rendering service (Roztocki, N., 1999; Saldarini, K., 2000). With control comes responsibility for the behaviour of the cost of services. With responsibility for cost comes the responsibility for profits of important departments or components of the organization which render the various laundry services by Agostino plc. After getting the cost driver rate, the same could now be multiplied with the actual cost number driver units. Since the case facts do not appear to have provided the actual number of cost driver units, this paper made use of the forecasted level of activity for next years for the three kinds of services and assume the same to be actual. The process resulted to allocation of the total actual indirect costs based on activities identified