Problem 2.30 Systems Concepts, Traditional versus Activity-Based Cost Accounting Systems The following items are associated with a traditional cost accounting information system, an activity-based...

Problem 2.30 Systems Concepts, Traditional versus Activity-Based Cost Accounting
Systems
The following items are associated with a traditional cost accounting information system, an
activity-based cost accounting information system, or both (that is, some elements are common
to the two systems):
a. Usage of direct materials
b. Direct materials cost assigned to products using direct tracing
c. Direct labor cost incurrence
d. Direct labor cost assigned to products using direct tracing
e. Setup cost incurrence
f. Setup cost assigned using number of setups as the activity driver
g. Setup cost assigned using direct labor hours as the activity driver
h. Cost accounting personnel
i. Submission of a bid, using product cost plus 25 percent
j. Purchasing cost incurrence
k. Purchasing cost assigned to products using direct labor hours as the activity driver
l. Purchasing cost assigned to products using number of orders as the activity driver
m. Materials handling cost incurrence
n. Materials handling cost assigned using the number of moves as the activity driver
o. Materials handling cost assigned using direct labor hours as the activity driver
p. Computer
q. Costing out of products
r. Decision to continue making a part rather than buying it
s. Printer
t. Customer service cost incurred
u. Customer service cost assigned to products using number of complaints as the activity
driver
v. Report detailing individual product costs
w. Commission cost
x. Commission cost assigned to products using units sold as the activity driver
y. Plant depreciation
z. Plant depreciation assigned to products using direct labor hours
Required:
1. For each cost system, classify the relevant items into one of the following categories:
a. Interrelated parts
b. Processes
c. Objectives
d. Inputs
e. Outputs
f. User actions
2. Explain the choices that differ between the two systems. Which system will provide the best
support for the user actions? Explain.
3. Draw an operational model that illustrates each cost accounting system—with the items that
belong to the system used as examples for each component of the model.

4. Based on the operational models, comment on the relative costs and benefits of the two sys-
tems. Which system should be chosen?