costacctg13_sm_ch05

abcproductcostingatbankscrosssubsidization 1

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Unformatted text preview: n decisions. ABC provides a road map as to how to reduce the costs of individual products. The relative co mponents of costs are: Retail Direct costs Direct materials Packaging Indirect costs Cleaning Cutting Packaging Total costs 12.6% 16.8 10.1 20.2 40.3 100.0% Institutional 24.20% 12.90 19.35 24.20 19.35 100.00% Packaging­related costs constitute 57.1% (16.8% + 40.3%) of total costs of the retail product line. Design efforts that reduce packaging costs can have a big impact on reducing total unit costs for retail. c. Process improvements. Each act ivit y area is now highlighted as a separate cost. The three indirect cost areas comprise over 60% of total costs for each product, indicat ing the upside fro m improvements in the efficiency o f processes in these act ivit y areas. 5­19 5­26 (20-25 min.) Activity­based costing, job­costing system. 1. An overview of the activit y­based jo b­costing system is: INDI REC T C O S T P O O L } Ax ial In sertion D ip I nsertion M anu al Inser tio n...
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