FINC 577 Chapter 4 Notes Outline

Chapter 4 7 abc definitions activity activity any

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Unformatted text preview: Definitions Activity: Activity: Any event, action, transaction, or work sequence that causes a cost to be incurred in producing a product or providing a service. Activity Cost Pool: The overhead cost attributed Pool: to a distinct type of activity. Examples: Purchasing Purchasing materials. Setting up machines. Cost Drivers: Any factors or activities that have vers: th a ___________________________________ ___________________________________ with the resources consumed. Chapter 4-8 ActivityActivity-Based Costing ABC ABC allocates overhead costs in two stages: Stage 1: Overhead costs are allocated to 1: activity cost pools. Stage 2: The overhead costs allocated to the 2: cost pools are assigned to products using cost drivers. The more complex a product’s manufacturing operation, the more activities and cost drivers likely to be present. Chapter 4-9 OVERHEAD COSTS Chapter 4-10 Overhead Overhead Costs Chapter 4-11 ActivityActivity-Based Costing ABC does not replace an existing job does order/process cost system. ABC does segregate o...
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