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Case study 1
ABC costing and product line profitability reportProduct line profitability can be used to provide an idea about profit gained from sales of specific products of a company (Cokins, 2015). Product lines, which are similar to each other and can be used simultaneously in order to generate incised revenue This is a common method used in activity based costing in order to determine how well a product can perform a for a firm in generation of profits (Fredriksson & Moro, 2014).
Two key observations
Following are the key observation from valuation of cost pool:
1. Taxi fares are better than limousines as they are readily available and have lesser chances of being perished. Moreover, it is better and in demand due to its accessibility and usage by young people (Sopranzetti et al., 2014). Limousine on the other and are luxury cars which are used specifically by person who prefer luxury and for higher income groups. It is more of a rental than fair basic husband is used for comparatively long period.
2. Limousine on the larger hand can generate a lot of revenue from its usage. It is not cost efficient but it can generate a lot of income and price of its rental are comparatively higher and can be used by peoples who prefer luxury (Thaten et al., 2016).
Case study 2
Calculation of total direct materials and efficiency variance From the case study of Tomorrow Aged Care (TAC), following items of direct material has been recorded:
1. Bricks were used which has a cost of $500 for every 1,000 bricks. In total 50,000 bricks were used.
2. Timber had a cost of $15 per square meter and 1,000 square meter timber was used in production.
3. Prefabricated walls had a cost of $10,000 per wall and eight such walls were used in total.
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