ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT
Broad averaging (or peanut-butter costing) describes a costing approach that uses broad
averages for assigning (or spreading, as in spreading peanut butter) the cost of resources
17-1 Industries using process costing in their manufacturing areas include chemical
processing, oil refining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor
chips, beverages, and breakfast cereals.
AN INTRODUCTION TO COST TERMS AND PURPOSES
A cost object is anything for which a separate measurement of costs is desired. Examples
include a product, a service, a project, a customer, a brand category, an activity, and a
FLEXIBLE BUDGETS, OVERHEAD COST VARIANCES, AND
Effective planning of variable overhead costs involves:
1. Planning to undertake only those variable overhead activities that add value for
customers using the product or serv
Cost poola grouping of individual indirect cost items.
Cost tracingthe assigning of direct costs to the chosen cost object.
Cost allocationthe assigning of indirect costs to the chosen cost object.
Cost-allocation basea factor th