COMM 112 Lecture Notes - Lecture 6: Activity-Based Costing, Cost Driver, Expense
8 Mar 2018
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Document Summary
Is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity. Products are charged for the cost of capacity they use, not what they don"t use. Unused capacity costs are treated as period expenses. 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. Activity measure/cost driver: the allocation base - the activity that causes costs. Transaction driver - a count of the number of times an activity takes place. Duration driver - a measure of the time needed to complete an activity. Performed each time a batch is handled or processed, regardless of how. Performed each time a batch is handled or processed, regardless of how many units are in the batch. Relate to specific products and must be carried out regardless of how many batches are run or units are produced or sold.
