Unformatted text preview: ment decisions. Chapter
Limitations of Activity-Based Costing
Activity- Can be expensive to use
Some arbitrary allocations continue. Chapter
4-24 Use ABC When One or More of the
Products differ greatly in volume/manufacturing
Products lines are:
Require different degrees of support services. Overhead costs are a significant portion of total costs.
Significant change in manufacturing process or number of
Managers ignore data from existing system and instead
use “bootleg” or other alternative costing data.
4-25 Classification of Activity Levels
UnitUnit-level activities: Performed for each unit of production. Batch-level activities: Performed for each batch of product. ProductProduct-level activities: Performed in support of an entire product
line, but not always performed every time
a new unit or batch is produced. FacilityFacility-level activities: Required to support or...
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