ACCTG424 Lecture Notes - Lecture 2: Activity-Based Costing, Abc Comedy, Cost Driver
17 Apr 2016
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Document Summary
Small similar consumption of shared resources single cost pool su cient. Multiple products with signi cantly di erent demands on resources. Re ning the cost system: direct tracing as much as possible, multiple indirect-cost pools with di erent allocation bases. The allocation base is a measure of the activity cost driver. Cost hierarchy homogeneous cost pools: unit-level costs: vary with output, batch-level costs: vary with groups of units, product-sustaining: related to support for a product/service line, facility-sustaining: support for organization as a whole. Homogeneous cost pools: same level costs for which the same driver is appropriate. Key: resources are used in a xed proportion with each other relative to the same driver. Bene ts of abc: more accurate costing for better decision making, better management of activities, improved manufacturing processes ittner, lanen, and lar- improvements in cycle time and quality as a cker (2002): result of abc adoption.
