Only a Game Inc.
This really is great! Weve only been producing the Sticky Fingers for six
months, and look at the profits. Sales projections for the future go nowhere but
up, up, up! Im going to take my family on a well-deserved vacation.
Noreen, Brewer, Garrison
Managerial Accounting for Managers
2e (AC222 custom edition)
CHAPTER 7 NOTES
COURSE OBJECTIVE C: Distinguish between the direct and indirect costs of products and
services, and learn the benefits and drawbacks of different ways of
Soaker Systems sells sprinkler systems designed for large and small yards. The company is
considering adoption of an activity-based costing system. Last year they incurred a total of
$1,000,000 in overhead costs, related to the following activiti
-Overhead costs are indirect costs. That is, they cannot be easily or economically
traced, directly, to units of product.
-specify a cost driver/allocation base(cause of most of our overhead costs)
-estimated OH cost/estimated units of cost driv
REVIEW OF USEFUL AC 221 CONCEPTS
DEPRECIATION AND RELEVANT COSTS
Why isnt depreciation on currently owned assets RELEVANT when you are calculating the
relevant costs in a decision situation?
Suppose we have two decision choices, A and B. If we choose A, w