Management and Organizational Studies 3370A/B Lecture Notes - Lecture 7: Financial Statement, Cost Driver

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3370A/B
• Professor: Bill Dawson

Document Summary

Activity-based costing (abc: costing method based on activated designed to provide managers with cost information for strategic and. Chapter 7: activity-based costing other decisions that potentially affect capacity and therefore fixed costs: used for internal decision making. The treatment of costs under the activity-based costing model: Abc differs from traditional costs accounting: non-manufacturing as well as manufacturing costs may be assigned to products but only on a cause-effect basis. Some manufacturing costs may be excluded from product costs: numerous oh cost pools are used (groups of oh elements) allocated uniquely, oh rates based on level of activity. Non-manufacturing costs and abc: oh refers to non-manufacturing costs and indirect manufacturing costs. In abc, products are assigned all of oh costs that can be estimated. Spreads all manufacturing oh costs across products based on each products dl hours: abc assigns costs to a product only if there is good reasons to believe that cost would be affected by decisions concerning product.