BU247 Chapter Notes - Chapter 5: Enterprise Resource Planning, Standard Cost Accounting, Fixed Cost
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It enables a much simpler abc model to capture even highly complex operations through the use of time equations. Requires estimating two parameters: first identify all costs incurred to supply that resource. Second, identify the capacity supplied by that resource: an estimate of how much of each resource"s capacity is used by the activities performed to produce the various products and services. Cost of using resource i by product j = capacity cost rate of resource i x quantity of capacity of resource i used by product j. Read over madison dairy"s ice cream factory p. 173 174 to see this in place. Determine the quantity of time that each product used of each production resource. Read over madison dairy"s ice cream factory p. 174 175 to see this in place. Calculate the costs for each product by multiplying the resource usage times by each resource"s capacity cost rate.
