Activity-Based Costing - Activity-Based Costing I II...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Activity-Based Costing I. Assigning overhead costs to products a. Plantwide overhead rate a.i. Single overhead rate a.ii. On an economy wide basis, direct labor and overhead costs have been moving in opposite directions for a long time a.ii.1. As a percentage of total cost direct labor decreases, overhead increases a.iii. The simple approach a.iii.1. To overhead assignment, can result in distorted unit product costs b. Departmental overhead rates b.i. Many company use this b.ii. Usually relies on a single measure of activity as the base for allocating overhead cost to products c. Activity-based costing (ABC) c.i. A technique that attempts to assign overhead costs more accurately to products than the simpler methods c.ii. Activity: is an event that causes the consumption of overhead resources c.ii.1. Example: scheduling production, maintaining equipment, billing customers, stocking shelves, etc. c.iii. Activity (overhead) cost pool: is a “cost bucket” in which costs related to a particular activity measure are accumulated c.iv. Activity Measure: expresses how much of the activity is carried out and it is used as the allocation base for assigning overhead costs to products and services c.iv.1. Example: number of patients admitted is a natural choice of
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern