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FINC 577 Chapter 4 Notes Outline

Enhanced control over overhead costs better

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Unformatted text preview: ment decisions. Chapter 4-23 Limitations Limitations of Activity-Based Costing Activity- Can be expensive to use (Cost/Benefit). Some arbitrary allocations continue. Chapter 4-24 Use ABC When One or More of the Following Exist: Products Products differ greatly in volume/manufacturing complexity. Products 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 products. Managers ignore data from existing system and instead use “bootleg” or other alternative costing data. Chapter 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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