costacctg13_sm_ch05

Significantamountsofindirectcostsareallocatedusingonly

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Unformatted text preview: costs are incurred on different activit ies wit h different cost­allo cation bases wit hin a department but different products use resources fro m the different activit y areas in the same proportions. 5­10 “Tell­tale” signs that indicate when ABC systems are likely to provide the most benefit s are as fo llows: 1. Significant amounts of indirect costs are allocated using only one or two cost pools. 2. All or most indirect costs are ident ified as output­unit­level costs (i.e., few indirect costs are described as batch­level, product­sustaining, or facilit y­sustaining costs). 3. Products make diverse demands on resources because o f differences in vo lume, process steps, batch size, or complexit y. 4. Products that a company is well suited to make and sell show small pro fits, whereas products that a company is less suited to produce and sell show large profits. 5. Operations staff has significant disagreements wit h the account ing staff about the costs of manufacturing and market ing products and services. 5­11 The main costs and limitat ions o f ABC are the measurements necessary to implement the systems. Even basic...
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This note was uploaded on 10/11/2010 for the course ACCT 321 taught by Professor Cole during the Spring '10 term at University of Miami.

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