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15 Cards in this Set

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Unit-level OH activity
act. done 2 each unit
- power/electricity
-machinery
-indirect material like glue, buttons or tacks
Batch-level OH activity
activity done 4 each batch
- set ups[4 each batch]
-inspections[4 each batch]
-material handling[4 each batch]
-production scheduling[bby the batch]
ex: coca-cola
Product Sustaining OH activity
activity done for the ENTIRE product type
-Product engineering
-product improvement
-equipment maintenance
ex: a new label 4 a coke can
Facility-level OH activity
activity for the ENTIRE factory itself
-plant management
-landscaping
-plant maintance
-security
-property taxes
-property insurance
ABC Stage 1: classify cost pools into activity levels
Cost Distribution
ABC stage 2: identify a cost driver 4 each pool of similiar costs[homogenous cost pools] then assign these costs 2 the various products
OH application
Traditional volume costing
tends 2 overcost high volumes products, undercost low volume products; cost pools amouts are assigned based on the # of transactions that a product line uses
NOTE
in abc costing, many of the OH costs become direct costs; this leads 2 more accuracy
Indications that yu should use ABC
-high overhead costs
-diverse product lines
-DL cost insignificant
-
Activity Based Cpsting
-more correct than tradtional, volume based methods.
-it is being used more used now b/c:
-products are more complex
-heavier competition
-labor not as important b/c of machines
Volume Based Costing
- less accurate
-does not work well in high tech world
-works well 4 single product companies
process costing
company that makes the same unit over and over[ex. coca-cola]
1.accumulate the costs
2.assign the costs 2 the products
Departmental Production Report
used[instead of a job cost sheet] to report costs of products under process costing
weighted average method
avg costs from 2 or more seperate acctg periods. it uses EU, act. materials and labor cost, and estimated OH[based on a rate times actual hrs]
equivalent unit
the amount of productive effort applied 2 a physical unit of production
ex: 4 units, 25% completed = 1 fully completed unit