ACF2200 Lecture Notes - Lecture 7: Virginia Department Of Alcoholic Beverage Control, Deutsche Luft Hansa, Activity-Based Costing
Document Summary
Why not the conventional costing system: failure to adapt to the changing business environment. Increasing proportions of non-manufacturing costs: causes of changes in cost structures include: Increased emphasis on upstream and downstream areas of the value chain, for example, customer demand for improved service, quality, marketing and customer support. A method that can be used to measure both the cost of cost objects and the performance of activities. Can help solve problems such as: distorted product costs, poor cost control. The costing view (abc: measures the cost of activities, assigns activity costs to cost objects (e. g. products) Activity-based management view (abm: provides information to manage activities, managing costs and other sources of customer value. Three type of cost drivers: resource drivers (abc, activity drivers (abc, root-cause cost drivers (abm) (the underlying factors that cause activities to be performed and their costs to be incurred) Stage one: oh costs are assigned to cost pools representing oh activites rather than departments.