Activity Based Costing

Front 1

Why was ABC costing developed?

Back 1

Overhead became an eer greateer percentage of the total cost.

To avoid peanut butter costing.

Front 2

Volume based costing involve

Back 2

1. Accumulating costs in GL.
2. Using a single cost pool to combine in all the related accounts.
3. selecting a single driver to use for the entire indirect cost pool.
4. Allocating the indirect cost pool to final cost objects.

Front 3

Activity based systems

Back 3

1. Identifying organization activities that constitute overhead.
2. Assigning the costs of resources consumed by the activities,
3. Assigning the costs of te activities to final cost objects, based on the activity that drives (causes) the costs.

Front 4

Activity Analysis - Unit Level activities

Back 4

Performed for each unit of output produced.

using direct materials and direct labor

Front 5

Activity Analysis- Batch level activities

Back 5

occur for each group of outputs produced.

Front 6

Activity Analysis- Product sustaining activities

Back 6

Support production of a particular product ( or service) , irrespective of the level of production.

Examples are product design engineering changes, and testing.