Read the article, Information Usefulness and Usage in Business Decision-Making: An Activity-Based Costing (ABC) Perspective(the article can be located via the LIRN in GAP). In a 4 to 6-page written report, address the following questions:
1. Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Answer the following questions regarding these two systems:
a. Compare and contrast the two costing systems.
b. Which costing system should a service firm, such as an advertising agency use?
c. How do these two systems provide decision-making information?
2. Describe activity based costing.
Give two examples where activity based costing is preferable over traditional costing.
a. How is activity-based costing useful for decision making?
b. Discuss the three overhead rate methods used in activity-based costing and consider their relative usefulness.