Ppt on activity based costing

McGraw-Hill /Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Supplementary Slides - Activity Based Costing Systems Design:

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Activity Cost Pool A “cost bucket” in which costs related to a particular activity are accumulated Activity Measure Expresses how much of the activity is carried out and is used as the allocation base for applying overhead costs Activity-Based Costing (ABC) Activity Rate A predetermined overhead rate for each activity cost pool. McGraw-Hill /Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc/


COST & MANAGEMENT ACCOUNTING

Continuous Improvement Goals Incorporates continuous improvement during the budget period into the budget numbers JAPANESE COMPANIES Citizen Watch Co. ACTIVITY-BASED BUDGETING Incorporating Activity-based Cost Drivers into Budgets Focuses on the Budgeted Cost of Activities Budget for each Activity ZERO BASE BUDGETING All Activities : Evaluated A method of budgeting All Activities : Evaluated Every item of expenditure : Fully Justified Involves starting from scratch or zero ZBB & GOVT. STEPS OF ZBB Identify/


Activity Based Costing

individual activities as the fundamental cost object. ABC calculates the costs of individual activities and assigns costs to cost objects such as products and services on the basis of the activities undertaken to produce each product or service. Cost Accounting Horngreen, Datar, Foster Activity-Based Costing System Fundamental Cost Objects Activities Cost of Activities Assignments to Other Cost Objects Cost of Product, Service, Customer Cost Accounting Horngreen, Datar, Foster Activity-Based Costing System/


Worksite Health Promotion: Lessons Learned by CDC Thomas L Schmid Physical Activity and Health Branch Centers for Disease Control and Prevention Active.

issues for workforce 4.Tailored to needs of individuals in workforce 5.Achieve high rates of participation 6.Achieve successful outcomes 7.Based on clear definitions of success Goetzel et al. In press CDC Worksite Activities Healthier Worksite Initiative Validation of obesity cost calculator Guide Translation - CDC working group - RTI evaluation contract - Goetzel contract for “Promising Practices” Healthier Worksite Initiative Validation of obesity/


McGraw-Hill /Irwin Copyright © The McGraw-Hill Companies, Inc. All rights reserved. Supplementary Slides - Activity Based Costing Systems Design: Activity.

/Irwin Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Activity Cost Pool 作业成本库 A “cost bucket” in which costs related to a particular activity are accumulated Activity Measure 作业度量 Expresses how much of the activity is carried out and is used as the allocation base for applying overhead costs Activity-Based Costing (ABC) Activity Rate 作业分配率 A predetermined overhead rate for each activity cost pool. McGraw-Hill /Irwin Copyright © by The McGraw-Hill Companies, Inc. All/


Overhead Cost Controlling

system distributes actual costs by cost element to the activity types based on the target costs or target quantities. If no target costs exist for a cost element, the R/3 System uses the target costs of the assigned cost element group to determine a tracing factor for the first splitting step. This entails: The distribution of primary costs, based on the target costs. The distribution of secondary costs ( indirect activity allocation) based on the/


Managerial Accounting by James Jiambalvo

Managerial Accounting by James Jiambalvo Chapter 6: Cost Allocation and Activity-Based Costing Slides Prepared by: Scott Peterson Northern State University Objectives Explain why indirect costs are allocated. Describe the cost allocation process. Discuss allocation of service department costs. Identify potential problems with cost allocation. Discuss activity-based costing (ABC) and cost drivers. Discuss activity-based management (ABM). Purposes of Cost Allocation To provide information needed for decision /


Using Activity-Based Costing to Implement Supply Chain Improvements Terrance L. Pohlen Lt Col, USAF, PhD.

Division B Product Division C Product Division D How Does ABC Assign Costs? ABC uses a two-stage process to assign costs –Resource costs are assigned to activities based on use –Activity costs are assigned to the products or customers consuming the activity Activity DIRECT MATERIALS Direct Labor Activity DIRECT MATERIALS Activity DIRECT MATERIALS Activity DIRECT MATERIALS OUTPUT $$ Activity-based costing approach Overhead Direct Labor Overhead Direct Labor Overhead Direct Labor Overhead Resources Resources/


Hilton Maher Selto. 17 Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc.,

flexible budget The traditional budget Activity-based flexible budget Costs are categorized as variable based on volume measures Costs are categorized as variable based on volume measures Machine hours Machine hours Direct labor hours Direct labor hours Costs are categorized as variable based on several cost drivers Costs are categorized as variable based on several cost drivers Cost that may seem fixed with respect to a single volume-based cost driver may be variable with/


Science and Technology Directorate MSFC 1 MSFC Business Base Forecast Science and Technology Directorate Dr. Ann F. Whitaker Director:Dr. Ann F. Whitaker.

other centers Business Initiative: Radiation Shielding Description of Initiative (All current and evolving Programs/projects/activities) (Direct & Corp. G&A) Benefits to Doing the Work Budget – (In Full Cost) Key Milestones we commit to with the Budget Brief Description Baseline Radiation Shielding Program plus potential zero base review activities (improve TRL, dosimetry, high spatial resolution, life systems, and SRSP support) Classification: Directed___X_ or Competitive_____/


Activity Based Costing: A Tool to Aid Decision Making Chapter 8.

/McGraw-Hill Overhead rates may be based on activity at capacity. Overhead rates may be based on activity at capacity. Activity Based Costing (ABC) Activity-Based Costing Both manufacturing and nonmanufacturing costs may be assigned to products. Both manufacturing and nonmanufacturing costs may be assigned to products. Some manufacturing costs may be excluded from product costs. Some manufacturing costs may be excluded from product costs. There are a number of cost pools each of which is allocated/


Copyright © 2007 Prentice-Hall. All rights reserved 1 Activity-Based Costing and Other Cost Management Tools Chapter 24.

Copyright © 2007 Prentice-Hall. All rights reserved 1 Activity-Based Costing and Other Cost Management Tools Chapter 24 Copyright © 2007 Prentice-Hall. All rights reserved 2 Objective 1 Develop activity-based costs (ABC) Copyright © 2007 Prentice-Hall. All rights reserved 3 Activity-Based Costing A way to allocate indirect cost to production Focus – on activities and cost of activities Each activity has its own cost driver (factors that cause you to incur expenses) Uses a separate allocation/


5 - 1 ©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Activity-Based Costing and Activity-Based Management Chapter.

3 Distinguish between the traditional and the activity-based costing approaches to designing a costing system. 5 - 19 ©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Activity-Based Costing System Fundamental Cost Objects Activities Costs of Activities Assignment to Other Cost Objects Cost of: Product Service Customer 5 - 20 ©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Activity-Based Costing System A cross-functional team at Kole/


1 Activity based costingActivity based costing – ABC –Created as an answer to criticism of traditional costing (1987 - Cooper R., Kaplan R. S., How.

ISO 9000:2000 certificate –E- business –Use of activity based costing (ABC) –Activity based management –Implementation of Customer Relationship Management and Knowledge Management concepts 10 Activity based costing - process approach Amortization Labour Materials Social insurance Energy Employee benefits Foreign services Taxes, charges and fees MaterialsEmployeesEquipment Space Activity 1 Activity 1 Activity 3 Activity 3 Activity 2 Activity 2 Activity N Activity N... Product A Product A Product D Product D/


©2005 Prentice Hall Business Publishing, Introduction to Management Accounting 13/e, Horngren/Sundem/Stratton 4 - 1 Cost Management Systems and Activity-

/Stratton 4 - 38 Learning Objective 6 Apply the process used to design a cost accounting system that includes activity-based costing. ©2005 Prentice Hall Business Publishing, Introduction to Management Accounting 13/e, Horngren/Sundem/Stratton 4 - 39 Design of an Activity-Based Cost Accounting System Traditional Cost Accounting System Maintenance costs Shipping costs Administrative costs Quality control costs Products 1 - 20 Reactor hours 120 - - - ©2005 Prentice Hall Business Publishing, Introduction to/


Chapter 5 Activity-based Cost Systems

cost-allocation base for each indirect-cost pool. Activity-Based Costing System ABC systems refine costing systems by focusing on individual activities as the fundamental cost object they measure utilization of each activity by cost objects and assign the cost of the activity accordingly total cost of activity per period (“cost pool”) total utilization of activity per period Cost driver rate ¸ = cost driver units used by cost object Cost driver rate overhead cost assigned to cost object × = Activity-based/


ACTIVITY BASED COSTING. Learning Objectives Discuss the importance of unit costs Describe the functional-based costing approach Explain why functional-based.

teamwork among accounting, production, marketing, management 4 Steps of Activity-Based-Costing Ê Identify activities that consume resources and assign costs to those activities Ë Identify cost driver(s) associated with each activity cost driver = factor that causes or “drives” an activity’s costs ¸ Compute a cost rate per unit (of cost driver) ¹ Assign costs to products Multiply the cost driver rate times the volume (amount) of cost driver units consumed by product 4 Steps of ABC - Example/


5 - 1 Activity-Based Costing and Activity-Based Management Chapter 5.

various customers. 5 - 18 Learning Objective 3 Distinguish between the traditional and the activity-based costing approaches to designing a costing system. 5 - 19 Activity-Based Costing System Fundamental Cost Objects Activities Costs of Activities Assignment to Other Cost Objects Cost of: Product Service Customer 5 - 20 Activity-Based Costing System A cross-functional team at Kole Corporation identified key activities: Design products and processes. Set up molding machine. Operate machines to manufacture/


Activity Based Costing: A Tool to Aid Decision Making 11/16/04 Chapter 8.

predetermined overhead rate is based on budgeted activity. This results in applying overhead costs of unused, or idle, capacity. Traditional Cost Accounting The predetermined overhead rate is based on budgeted activity. This results in applying overhead costs of unused, or idle, capacity. Activity Based Costing Activity Based Costing Products are charged for the costs of capacity they use – not for the costs of capacity they don’t use. Activity Based Costing Activity Based Costing Products are charged for/


16-1 Copyright  Houghton Mifflin Company. All rights reserved. Chapter 16 Operating Costs and Cost Allocation, Including Activity-Based Costing Belverd.

 Houghton Mifflin Company. All rights reserved. Activity-Based Costing (ABC) »In the search for more accurate product costing, many organizations embraced activity-based costing. 16-34 Copyright  Houghton Mifflin Company. All rights reserved. ABC Cost Assignment »ABC is an approach to cost assignment that:  Categorizes all indirect costs by identifying activity cost pools.  Traces costs to those activity pools.  Assigns activity costs to products using a cost driver that is related to the cause of/


Copyright © 2006, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin Chapter Three Systems Design: Job-Order Costing.

a predetermined rate makes it possible to estimate total job costs sooner. Actual overhead for the period is not known until the end of the period. The Need for a POHR $ Copyright © 2006, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin Actual amount of the allocation based upon the actual level of activity. Based on estimates, and determined before the period begins. Application of/


1 ACTIVITY-BASED COSTING Chapter 7 Accounting Principles II AC 2102 - Fall Semester, 1999.

difference between the two methods concerns the nature and number of cost drivers used 14 Drivers Used In Activity-Based Costing Systems Uses both unit-based and nonunit- based activity drivers These drivers must reflect a cause-and- effect relationship In practical terms, drivers must explain a large percentage of activity cost variablity 15 Number of Cost Drivers Used In Activity-Based Costing The number of drivers used is generally greater than the/


Columbia University Medical Center

2005 OMB Circular A-21 Allocability Section C.4.d Direct cost allocation principles If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship involved/


© John Wiley & Sons, 2005 Chapter 7: Activity-Based Costing and Management Eldenburg & Wolcott’s Cost Management, 1eSlide # 1 Cost Management Measuring,

Wiley & Sons, 2005 Chapter 7: Activity-Based Costing and Management Eldenburg & Wolcott’s Cost Management, 1eSlide # 9 Q1: Traditional Costing vs. ABC Activity-based costing systems: Indirect Costs Product A Product B Product C Direct Costs The individual products are the final cost objects & direct costs are traced to the individual products. Indirect costs are assigned (traced & allocated) to various pools of activity costs. Activity 1 Activity 2 Activity 3 Activity costs are allocated to products © John/


New Mexico State University

client mailing Deliver the letters to the post office Begins the delivery process Implementing Activity-Based Costing OBJECTIVE 4 Define a cost hierarchy, describe its elements, and explain how a cost hierarchy and a bill of activities are used in activity-based costing. Cost Hierarchy Many companies use a cost hierarchy to manage the assignment of activity-based costs. A cost hierarchy for a manufacturer typically has four levels: Unit level. Batch level. Product level/


Activity Based Costing

to consider using activity based costing (ABC). ABC Definitions Activity based costing is an approach for allocating overhead costs. An activity is an event that incurs costs. A cost driver is any factor or activity that has a direct cause and effect relationship with the resources consumed. ABC Steps Overhead cost drivers are determined. Activity cost pools are created. A activity cost pool is a pool of individual costs that all have the same cost driver. All overhead/


Advanced Costing - ABC Activity Based Costing

“ value adding process that consumes resources” Cost Driver “ activity or factor which generates costsCost Pool “pooling or collection of overhead cost which relates to a specific activityCost driver rate = Cost Pool/Cost Driver volume Activity Based Costing (ABC) Steps Identify major activities. Identify appropriate cost drivers (note: you may have to justify your choice here in the exam) for each activity. Collect costs into pools based upon the activities. Calculate a cost driver rate e.g. €10/


The Islamic University of Gaza Cost Accounting

of the value chain, calculate costs of individual activities, and assign costs to cost objects such as products and services Activity-Based Costing Systems ABC systems identify activities in all functions of the value chain, calculate costs of individual activities, and assign costs to cost objects such as products and services Cost Hierarchies A cost hierarchy categorizes various activity cost pools on the basis of the different types of cost drivers, or cost-allocation bases. ABC systems commonly use/


Activity-Based Costing: A Tool to Aid Decision Making

to products. ABC uses more cost pools. How Costs are Treated Under ActivityBased Costing Two common types of activity measures: Simple count of the number of times an activity occurs. Transaction driver A measure of the amount of time needed for an activity. Duration driver Steps for Implementing Activity-Based Costing Define activities, activity cost pools, and activity measures Assign overhead costs to activity cost pools Calculate activity rates Assign overhead costs to products, customers, etc., using/


7-1 Designing Product Cost Systems C hapter 7 Prepared by Douglas Cloud Pepperdine University.

Prepared by Douglas Cloud Pepperdine University 7-2 1.Define and explain the primary elements of an indirect cost allocation system. 2.Describe the process of allocating service department costs, including the treatment of interdepartmental services. 3.Compare and contrast activity-based costing (ABC) and traditional organizational-based costing (OBC). ObjectivesObjectives After studying this chapter, you should be able to: ContinuedContinued 7-3 4.Calculate overhead rates/


© 2012 McGraw-Hill Education (Asia) Activity-Based Costing: A Tool to Aid Decision Making Chapter 7.

consumption of overhead resources. Activity Cost Pool A “cost bucket” in which costs related to a single activity measure are accumulated. $ $ $ $ $ $ How Costs are Treated Under ActivityBased Costing McGraw-Hill Education (Asia) Garrison, Noreen, Brewer, Cheng & Yuen McGraw-Hill/Irwin Slide 10 Activity Measure An allocation base in an activity-based costing system. How Costs are Treated Under ActivityBased Costing The term cost driver is also used to refer to an activity measure. McGraw-Hill Education/


Activity Based Costing: A Tool to Aid Decision Making

such orders, the greater the cost. Activity based costing attempts to trace through these relationships to identify how products and customers affect costs. Designing of an ABC System Steps for Implementing ABC Identify and define activities and activity cost pools. Trace costs to activities and cost objects. Assign costs to activity cost pools. Calculate activity rates. Assign costs to cost objects. Prepare management reports. Identify and Define Activities and Activity Cost Pools The first major step in/


WHAT’S UP WITH C&C SPORTS?

FIVE STEPS TO IMPLEMENT ABC Identify activities Develop activity cost pools Calculate activity cost pool rates Allocate costs to products or services Calculate unit product costs ACTIVITY-BASED COSTING (STEPS 1 & 2) See Exhibit 7-5 for details of costs to activity pools ACTIVITY-BASED COSTING (STEP 3) See Exhibit 7-6 for details of activity cost pool rates ACTIVITY-BASED COSTING (STEP 4) See Exhibit 7-7 for details of cost allocations to each product ACTIVITY-BASED COSTING (STEP 5) ÷ ÷ ÷ COMPARISON OF/


Activity-Based Costing

LO1 Recognize the difference between traditional costing and activity-based costing. Traditional Costing and Activity-Based Costing Activity-Based Costing- an approach of allocating overhead Allocates overhead to multiple activity cost pools, and Assigns the activity cost pools to products or services by means of cost drivers. LO1 Recognize the difference between traditional costing and activity-based costing. Traditional Costing and Activity-Based Costing Activity: any event, action, transaction, or work/


Chapter Seven Activity-Based Costing: A Tool to Aid Decision Making.

hours and/or machine hours to allocate all overhead costs to products. 8-8 Activity An event that causes the consumption of overhead resources. Activity Cost Pool A “cost bucket” in which costs related to a particular activity measure are accumulated. $ $ $ $ $ $ How Costs are Treated Under ActivityBased Costing 8-9 Activity Measure An allocation base in an activity-based costing system. How Costs are Treated Under ActivityBased Costing The term cost driver is also used to refer to an/


Kinney ● Raiborn Cost Accounting: Foundations and Evolutions, 8e © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated,

product or service or otherwise on a password-protected website for classroom use. Activity-Based Management Activity analysis Cost driver analysis Activity-based costing Continuous improvement  Operational control  Quality management  Business process improvement  Performance/otherwise on a password-protected website for classroom use. Activity-Based Costing Record Costs in GL Accumulate in Activity Center Cost Pools Cost Driver Activity Driver Cost Objects © 2011 Cengage Learning. All Rights Reserved. /


5 - 1 ©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Activity-Based Costing and Activity-Based Management Chapter.

3 Distinguish between the traditional and the activity-based costing approaches to designing a costing system. 5 - 19 ©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Activity-Based Costing System Fundamental Cost Objects Activities Costs of Activities Assignment to Other Cost Objects Cost of: Product Service Customer 5 - 20 ©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Activity-Based Costing System A cross-functional team at Kole/


5 - 1 Overview of Activity-Based Cost Systems for Management Control ACCT7320, Dr. C. Bailey.

 Identify activity centers  Accumulate costs into activity center cost pools cost drivercost driver  Allocate costs to products and services activity driveractivity driver 5 - 10 Activity-Based Costing System Cost of Activity A Other Indirect Costs of product/svc (including other non-ABC items) Cost of Product, Service, Customer Fundamental Cost Objects: Labor, materials, etc. (All indirect to the Product or Service) Cost drivers Activity drivers Other Cost drivers Direct Costs Traced Cost of Activity B/


Training Presentation: Activity-Based Costing By David Fukuda.

to identify “business- sustaining and low-valued” activities. Summary-Continued Activity-based costing provides management with an alternate way of viewing costs within an organization.Activity-based costing provides management with an alternate way of viewing costs within an organization. Readings List Cokins, G. (2002). “Activity-Based Costing: Optional or Required?” Transactions of AACE International.Cokins, G. (2002). “Activity-Based Costing: Optional or Required?” Transactions of AACE International/


Activity-Based Costing: A Tool to Aid Decision Making

. ABC uses more cost pools. How Costs are Treated Under ActivityBased Costing An event that causes the consumption of overhead resources. Activity Cost Pool A “cost bucket” in which costs related to a single activity measure are accumulated. $ How Costs are Treated Under ActivityBased Costing The term cost driver is also used to refer to an activity measure. Activity Measure An allocation base in an activity-based costing system. How Costs are Treated Under ActivityBased Costing Two common types of/


Activity-Based Costing and Management

34960746 0333-2249877 Activity-Based Management Activity-based costing establishes relationships between overhead costs and activities so that we can better allocate overhead costs. Activity-based management focuses on managing activities to reduce costs. Two-Dimensional ABC and Activity-Based Management Activities Two-Dimensional ABC and Activity-Based Management Resource costs Cost Assignment View Activities Cost Objects Two-Dimensional ABC and Activity-Based Management Resource costs Cost Assignment View/


4 - 1 ActivityActivity-Based / Traditional StepsSteps of ABC Cost Cost Pools CostCost Drivers LimitationsLimitations/ Benefits of ABC ValueValue-Added.

-Service Ind. JustJust-In-Time HierarchyHierarchy Levels Next Slide Previous Slide End Show Activity-Based Costing (ABC) An overhead cost allocation system that allocates overhead to multiple activity cost pools and assigns the activity cost pools to products or services by means of cost drivers that represent the activities used. 4 - 8 ActivityActivity-Based / Traditional StepsSteps of ABC Cost Cost Pools CostCost Drivers LimitationsLimitations/ Benefits of ABC ValueValue-Added ABCABC-Service Ind. JustJust/


Managerial Accounting by James Jiambalvo

cost allocation. Discuss activity-based costing (ABC) and cost drivers. Discuss activity-based management (ABM). Activity-Based Costing Activity-Based Costing (ABC) is a relatively recent development in management accounting. Related Learning Objectives: Explain why indirect costs are allocated. Describe the cost allocation process. Discuss allocation of service department costs. Identify potential problems with cost allocation. Discuss activity-based costing (ABC) and cost drivers. Discuss activity-based/


Copyright © 2007 Prentice-Hall. All rights reserved 1 Activity-Based Costing and Other Cost Management Tools Chapter 5.

-Hall. All rights reserved 3 Activity-Based Costing A way to allocate indirect cost to production Focus – on activities and cost of activities Each activity has its own cost driver Uses a separate allocation rate for each activity Copyright © 2007 Prentice-Hall. All rights reserved 4 Activity-Based Costing Steps: Identify the activities Estimate the total indirect costs of each activity Identify the allocation base for each activity’s indirect costs (the primary cost driver) Estimate the total quantity/


G-1, Human Resources Policy Directorate Supporting Soldiers & Families – Active, Guard, Reserve and Retired UNCLASSIFIED Department of the Army Survivor.

retired pay they would have received under High-3. G-1, Human Resources Policy Directorate Supporting Soldiers & Families – Active, Guard, Reserve and Retired SBP Cost Formula (Spouse Only) Formula: - 6.5% of base amount selected - cost lowered in Mar ‘90 Examples: Base Amount:$2000 $3000 $4000 Cost (6.5%)$ 130 $ 195 $ 260 Annuity provided: $1100 $1650 $2200 G-1, Human Resources Policy Directorate Supporting Soldiers & Families/


Chapter 6 Cost Allocation and Activity- Based Costing.

high volume items are overcosted. III. Activity Based Costing (ABC) A.The ABC Approach B.Pros and Cons of ABC C.Activity Based Management (ABM) D.An Illustration of ABC A. The ABC Approach  Identify the major activities that cause overhead costs to be incurred.  Group costs of activities into cost pools.  Identify measures (allocation bases) of activities (the cost driver).  Relate costs to products using the cost drivers. B. Pros and Cons of ABC/


Activity-Based Costing Chapter 9 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

allocation rate. 9 - 5 Activity-Based Costing (ABC) L.O. 4 Explain how activity-based costing and a two-stage product system are related. ABC is a costing method that first assigns costs to activities and then assigns them to products based on the products’ consumption of activities. Assign costs to activities. Assign costs to products based on the use of each activity 9 - 6 Developing Activity-Based Costs LO4 Step 1:Identify the activities that consume resources and assign/


Cost Management in an Automated Business Environment (ABC, and TQM) Chapter 6.

McGraw-Hill Ryerson Limited, Canada 6-15 Activity-Based Costing A B C Activity-based costing (ABC) is a two-stage allocation process that employs a variety of cost drivers. Copyright © 2003 McGraw-Hill Ryerson Limited, Canada 6-16 Activity-Based Costing Activity-based costing (ABC) is a two-stage allocation process that employs a variety of cost drivers. Stage 1 Assign costs to pools according to activities that cause costs to be incurred. Stage 2 Allocate/


Activity-Based Costing

the difference between traditional costing and activity-based costing. Traditional Costing and Activity-Based Costing Illustration 4-2 Activities and related cost drivers SO1 Recognize the difference between traditional costing and activity-based costing. Traditional Costing and Activity-Based Costing Illustration 4-3 ABC system design—Lift Jack Company SO1 Recognize the difference between traditional costing and activity-based costing. Traditional Costing and Activity-Based Costing Indicate whether the/


System Design: Activity Based Costing

other factors. Activity-base costing is required to account for these other factors. Activity-Based Costing (ABC) 3-8 3-8 Activity-Based Costing (ABC) A number of allocation bases are used for assigning costs to products. Activity based costing is a technique that uses numerous allocation bases in an attempt to assign overhead costs more accurately to products than the plantwide or departmental approaches discussed thus far. Activity-Based Costing (ABC) 3-9 3-9 Activity-Based Costing (ABC) Cost Objects (e/


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