– Define an Activity Based Cost System (ABC) and what it is used for.
2- Discuss how an Activity Based Cost System can be used for a manufacturer of flat screen TV’s (Plasma and LCD). To help:
a- Maximize profits
b- Control costs
c- Determine production mix of LCD and Plasma models
d- Selling price for the 2 different models
e- Adjusting sales prices of two different models
f- Analyze cost differences between various models, assume plasmas are larger and require more overhead due to increased production time and more careful material handling.