Ch 5

Managerial Accounting: Creating Value in a Dynamic Business Environment

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Ch 5 Activity Based costing and Activity Based Management Chapter Overview I. Traditional, Volume-Based Costing Systems/Procedures II. Activity-Based Costing (ABC) Systems  A. Stage one: Identification of cost pools 1. Unit-level activities 2. Batch-level activities Set up Purchasing Material handling Quality assurance Packing/Shipping 3. Product-sustaining activities : support entire product line but are not  performed every time a new unit or batch of products is produced Engineering design costs 4. Facility-level activities  or general operations level Plant management salaries Plant depreciation Property taxes Plant maintenance Plant insurance B. Stage two:  Identification of cost drivers for each cost pool Calculation of pool rates Assignment of costs to products and services   III. Improved Costing Under ABC   Punch Line: Traditional, volume based costing systems over-cost high volume product 
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This document was uploaded on 06/22/2010.

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Ch 5 - Ch5 ChapterOverview I II Traditional,/Procedures...

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