COMM 112 Chapter Notes - Chapter 7: Activity-Based Costing, Cost Driver
Document Summary
Activity based costing: a costing method based on activities that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore fixed costs. Overhead cost pools: groups of overhead cost elements. Activity: any event that causes the consumption of overhead resources. Activity cost pool: a bucket in which costs are accumulated that relate to a single activity measure in the activity-based costing system. Activity measure: ab allocation base in an activity-based costing system; ideally, a measure of the amount of activity that drives the costs in an activity cost pool also called a cost driver. Transaction driver: a simple count of the number of times an activity occurs. Duration driver: a measure of the amount of time required to perform an activity. Unit level activities: activities that arise as a result of the total volume of goods produced and services performed each time a unit is produced.
