Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1

Solutions to review questions
3.1
Cost pool – a grouping of individual cost items.
Cost tracing – the assigning of direct costs to the chosen cost object.
Cost allocation – the assigning of indirect costs to the chosen cost object.
Cost allocation base – a factor that is the common denominator for systematically linking an indirect cost or a group of indirect costs to a cost object.
3.2
No. For most service-sector companies, labour is the single largest cost category. For example, labour costs comprise over 70% of the total costs of many law firms.

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
3.3
In a job-costing system, costs are assigned to a distinct unit, batch or lot of a product or service. Ina progress-costing system, the cost of a product or service is obtained by using broad averages to assign costs to masses of similar units.
3.4
An advertising campaign for Pepsi is likely to be very specific to that individual client. Job costing enables all the specific aspects of each job to be identified. In contrast, the progressing of cheque account withdrawals is similar for many customers. Here, progress costing can be used to compute the cost of each cheque account withdrawal.

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