ACTG 2300 Chapter Notes - Chapter 7: Computer Network, General Ledger, Activity-Based Costing
Document Summary
Activity-based costing: costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore fixed as well as variable costs. Expands definition of overhead to include all indirect costs- Activity: any event that causes the consumption of overhead resources. Activity cost pool: bucket in which costs are accumulated that relate to a single activity measure in the abc system. Activity measure: allocation base in an activity-based costing system. Transaction drivers: simple counts of the number of times an activity occurs, such as the number of bills sent out to customers. Duration drivers: measure the amount of time required to perform an activity, such as the time spent preparing individual bills for customers (more accurate measures of resource consumption) Five levels of activity in abc: unit-level activities: are performed each time a unit is produced.
