Back to category: Business

Limited version - please login or register to view the entire paper.

Costing System

1. Costing System


1.1 Illustrate the costing system currently used by Devon Quality in Cost Centre 3

The costing system currently used by Devon Quality Dairy in the Cost Centre 3 is a traditional costing system this is because in this case study Devon Quality Dairy are allocating there expenses to products using volume based drivers. In this case study, the resources consumed by Devon’s Cost Centre 3 are depreciation, labour, utilities and other, which are all of the costs that have been incurred in production that cannot be traced directly to the products.

The traditional costing system uses a single plantwide overhead rate based on output volume to allocate factory overhead costs to the products. The factory overhead rate is total factory overhead divided by the cost driver. In this case the cost driver is pounds of butterfat. The pounds of butterfat sold are chosen as the cost driver for Devon’s because the pounds of butte...

Posted by: Carmen hershman

Limited version - please login or register to view the entire paper.