ACCT 321 Study Guide - Activity-Based Costing, Fixed Cost, Variable Cost
Document Summary
The purpose of this chapter is to introduce activity-based management. Activity-based management is an approach to improving customer value and profitability based on managing the activities of the firm. Activity based costing deals with determining the cost of cost objects. Activity based management uses information about activities to manage activities and ultimately to reduce costs. The activity-based costing model we used in chapter 4 was as follows: The process view of the abc framework is used for activity-based management. When the cost assignment view and the process view are combined, we have what is referred to as the abc cross. Process driver analysis is used to implement activity-based management concepts. Process driver analysis includes: driver analysis, performance measurement, and, activity analysis. What are performance measures for activities: time measures-time required to perform a process or activity. These tend to be non-financial measures: quality measures-doing the activity right the first time and with producing quality outputs.
