Activity-Based Costing (ABC)

any event or task that causes the consumption of overhead resources

unit of manufacturing action that creates a change in the unit's expense

combination of all the expenses related to a specific task, such as making a product or providing a service

quantity of an activity that creates the activity costs in a cost pool

ratio of manufacturing overhead and total indirect costs, divided by a cost driver to determine a rate

accounting method in which expenses for overhead are distributed to manufactured items on the basis of the activities required

approach to managing costs that focuses on the assignment of costs to production activities

activity that depends on the number of batches run rather than on the number of units in the batch

process of measuring the quality of a company's products, performance, or processes against specific standards

any item for which a business measures costs; for example, a product, service, department, or activity

operating costs or expenses, such as rent, electricity, or taxes

product-specific process that must be carried out regardless of the number of units produced or batches run

system of accounting in which overhead expenses are placed into a single pool and distributed based on a predetermined rate

activity that occurs every time a unit is produced, giving a proportional cost per unit created