FINC 577 Chapter 4 Notes Outline

2000 inspections activity based activityoverhead

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Unformatted text preview: ivityOverhead Rates $200 per setup $ 10 per mach. hour $ 50 per inspection Expected Expected Use of Costs to Products Chapter 4-19 Assignment of Activity Cost Pools to Products Chapter 4-20 Unit Product Costs Under Traditional and ABC Costing Methods Manufacturing Costs Direct Materials Direct Labor Overhead Total Cost per Unit The The Boot Traditional Costing ABC $40 $40 12 12 17 30 $82 $69 The Club Traditional Costing ABC $30 $30 12 12 30 95 $72 $137 Overstated $13 Understated $65 Chapter 4-21 Results Results of Using ABC Under ABC, overhead costs are shifted from from the high volume product (The Boot) to the the low volume product (The Club) because: (The Club) Low volume products often require more ____________________. Assigning overhead using ABC will usually increase the cost per unit of low volume products. Chapter 4-22 Benefits Benefits of Activity-Based Costing ActivityMore More accurate product costing through: Use of more cost pools to assign overhead costs. Enhanced control over overhead costs. Better manage...
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