BUS 215 Chapter Notes - Chapter 7: Computer Network, General Ledger, Total Absorption Costing
Document Summary
Activity-based costing (abc) is a costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore fixed as well as variable costs. Lo 1: understand activity-based costing and how it differs from a traditional costing system. Abc differs from absorption costing in 3 ways products, but only on a cause-and-effect basis. 1 nonmanufacturing as well as manufacturing costs may be assigned to. 2 some manufacturing costs may be excluded from product costs. 3 numerous oh costs pools are used, each of which is allocated to product and. 1 abc, unlike absorption costing, includes nonmanufacturing costs when calculating the other cost objects using its own unique measure of activity entire cost of a product since they relate to selling, distributing, and servicing specific products. 1 abc traces all direct mcs (sales commissions, shipping costs, warranty repair)
