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Unformatted text preview: 5 Yes, the proposed multiple allocation base system correctly implements the principles of activity-based costing. There are three main principles for the ABC system: various cost pools allocated through different measures of activity, both manufacturing and non-manufacturing costs utilized by specific products assigned to those products, and some manufacturing costs excluded from the product costs. In this case, we have implemented these three principles correctly. For the first principle, we have four overhead cost pools: administration costs, client development costs, continuing professional education (CPE) costs, and unassigned professional staff time costs. Then, the cost pools are allocated through the measures of activity from the following: number of jobs in a service area for both administrative and client development costs, direct labor hours for CPE costs, and direct labor dollars for unassigned professional staff time costs. For the second principle, we have staff time as manufacturing cost and client development costs....
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This note was uploaded on 04/02/2009 for the course BUAD 250B taught by Professor Jackson during the Spring '07 term at USC.
- Spring '07