BU467 Chapter Notes - Chapter 7: Kaizen, Cost Driver, Liability Insurance
Document Summary
Traditional cost accounting systems (job costing, process costing) assign manufacturing production costs to individual products in inventory and cost of goods sold, while non manufacturing costs are recognized as period costs on the income statement. First, costs are gathered into cost pools. Then, costs are allocated to units: unlike traditional costing, abc uses multiple cost pools to reflect the various activities performed in manufacturing. Types of activities: organization sustaining activities: related to the overall org and are unaffected by the number of types of facilities and customers or by the quantity. Admin salaries, housekeeping, is salaries, accountant salaries. Cost drivers: these costs are not typically allocated b/c they do not vary with activity volumes: facility sustaining activities: related to the overall operations of a facility and unaffected by the number of customers served/quantities produced. Insurance, heating, manufacturing managers plant salary, amortization, liability insurance. Sales rep salaries, customer market research, special tools for a customers order.
