A report showing what costs have been assigned to a cost object, such as a product or customer, and how difficult it would be to adjust the cost if there is a change in activity.
An event that causes the consumption of overhead resources in an organization
Activity based costing (ABC)
A costing method based on activities that is designed to provide managers with cost informs for strategic and other decisions that potentially affect capacity and therefore fixed as well as variable costs.
Activity based management
A management approach that focuses on managing activities as a way of eliminating waste and reducing delays and defects.
Activity cost pool
A "bucket" in which costs are accumulated that relate to a single activity measure in an activity-based costing system.
Fan allocation base in an activity-based costing system; ideally a measure if the amount of activity that drives the costs in an activity cost pool.
Batch level activities
Activities that are preformed each time a batch of goods is handled or processed, regardless if how many units are in the batch. The amount of resource consumed depends in the number of batches run rather than in the number of units in each batch.
A systematic approach to identifying the activities with the greatest potential for improvement.
Customer level activities
Activities that are carried out to support customers, but that are not related to gang specific product
The measure of amount if time required to preform an activity
First stage allocation
The process by which overhead costs are assigned to activity cost pools in an active based costing system.
Organization sustaining activites
Activities that are carried out regardless of which customers are seved, which products are produced how many batches are fun of how many units are made.
Product level activities
Activities that relate to specific products that must be carried out regardless of how many units are produced and sold or batches run.
Second stage allocation
The process by which activity rates are used to apply costs to products and customers in activity based costing.
Simple count of the number of times an activity occurs.
Unit level activites
Activities that are preformed each time a unit is produced.
In ABC, products are assigned what portion of overhead costs?
All, manufacturing and non-manufacturing, that can reasonably be supposed to have caused.
Costs that adjust automatically to changes in activity without management action
Costs that would, in principle, be adjusted to changes in activity, but management action would be required.
Costs that would be very difficult to adjust to changes in activity and management action would be required.
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