chapeter 4 busi 101 - Hierachy of Activity: Unit Level,...

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Chapter 4 Sep 20 2010 ABC=Activity Based Costing Traditional system: One cOST Driver ABC System: Allocate overhead to multiple cost pools and the assigns the activity cost pools to products by means of cost drivers Cost Driver: A factor or activity that has a direct cause-effect relationshp with resources consumed. Benefits: 1. more cost pools 2. enhance control over overhead costs 3. better management decision Limitations: 1. more expensive 2. arbitrary(h ) allocation Value Added Activity-- increasing the worth of a product or service
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Unformatted text preview: Hierachy of Activity: Unit Level, Batch Level, Product Level, Facility Level Mark Up On Cost A company has a 25% mark up on cost, sales=100,000, what is cost? Sales 100,000 125%-Cost 80,000 100% GP 25% 80,000 is the answer Let Cost be 100% if mark up on cost A company has a 20% mark up on sale, sales=100,000, what is cost? Sales 100,000 100%-Cost 80,000 80% GP 20% 80,000 is the answer Let Sales be 100% if mark up on sale...
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This note was uploaded on 05/09/2011 for the course BUSI 101 taught by Professor Dj during the Spring '11 term at University of North Carolina School of the Arts.

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