M5 ABC Basics.pdf - M5 ABC Basics Thursday February 27 2020...

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LO 5-1 Understand activity-based costing and how it differs from atraditional costing system.We will learn how activity-basedcosting differsfrom the traditional cost accountingmethods.Activity-basedcostingestimates the costs of the resources consumedbycost objects, such as productsandcustomers; cost objectsgenerate activities thatconsumecostly resources. Activities formthe link between costs andcost objects.Thefirst step in the implementation of activity-based costingincludes defining theactivities, activity cost pools, and activity measures. The numberand definitions of theactivity cost pools and activity measures used bycompanies vary considerably.Wewill also learn how to use time-driven activity-basedcosting to assign costs to costobjectsand to analyze capacity.Which of the followingis an allocation base commonlyused under the traditionalmethodsfor allocation of overhead costs?

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