AFM102 Chapter Notes - Chapter 7: Activity-Based Costing, Cost Driver, Diversity Training
17 Feb 2016
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C7: activity-based costing o o o activity-based costing (abc): costing method designed to provide managers with cost information for strategic and other decisions that potentially affect capacity, fixed, and variable costs o o o. Supplement to, rather than a replacement, of company"s traditional job order/process costing. How abc differs from traditional cost accounting in several ways: both manufacturing and non-manufacturing costs may be assigned to products but only on a cause-and-effect basis (include r&d, salesman salary and commission) Many non-manufacturing costs are part of the costs of producing g/s (commissions paid to sales, shipping) As long as they"re crucial to bring the product into sellable condition. Abc method: products are assigned all of the overhead costs (non manufacturing as well as manufacturing) that they can reasonably be estimated to have caused: some manufacturing costs may be excluded from product costs.
