26907008
Descripción
Mapa Mental por Megan Heflin, actualizado hace más de 1 año
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Creado por Megan Heflin
hace más de 3 años
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Activity-Based Costing: A Tool to Aid Decision Making
- Different from traditional absorption costing
- Costs may only be assigned to products on a cause-and-effect basis
- Some manufacturing costs may be excluded from product costs
- Numerous overhead cost pools are used that are allocated to products using a specific measure of activity
- Costs may only be assigned to products on a cause-and-effect basis
- Two types of nonmanufacturing costs that ABC systems assign to products
- Direct nonmanufacturing costs
- Commissions paid to salespersons
- Shipping costs
- Warranty repair costs
- Commissions paid to salespersons
- Indirect nonmanufacturing costs
- Products have presumably cause the costs to be incurred
- Products have presumably cause the costs to be incurred
- Direct nonmanufacturing costs
- Manufacturing costs
- Products are charged only for the cost of the capacity they use
- Products are charged only for the cost of the capacity they use
- Activity
- Any event that causes the consumption of overhead recources
- Activity cost pool
- A "bucket" in which costs are accumulated that relate to a single activity measure in the ABC system
- A "bucket" in which costs are accumulated that relate to a single activity measure in the ABC system
- Any event that causes the consumption of overhead recources
- Five levels of activity that do not relate to the volume of units produced
- Unit-level activities
- Batch-level activities
- Product-level activities
- Customer-level activities
- Organization-sustaining activities
- Unit-level activities
- Three characteristics of a successful activity-based costing implementation
- Top managers must ssupport the ABC implementation to motivate employees to embrace the need to change
- Managers should ensure that ABC data is linked to how people are evaluated and rewarded to show that it is important
- A cross-functional team should be created to design and implement the ABC system
- Top managers must ssupport the ABC implementation to motivate employees to embrace the need to change
- Steps for Implementing activity-based costing
- 1. Define activities, activity cost pools, and activity measures
- 2. Assign overhead costs to activity cost pools
- First-stage allocation
- First-stage allocation
- 3. Calculate activity rates
- Computed by dividing the total cost for each activity by its total activity
- Computed by dividing the total cost for each activity by its total activity
- 4. Assign overhead costs to cost objects
- Second-stage allocation
- Second-stage allocation
- 5. Prepare management reports
- Product and customer profitability reports
- Product and customer profitability reports
- 1. Define activities, activity cost pools, and activity measures
- Activity-based management
- Focusing on activities to eliminate waste, decrease processing time, and reduce defects
- Focusing on activities to eliminate waste, decrease processing time, and reduce defects
- Generally not used for external reports
- External reports are less detailed than internal reports prepared for decision making
- Individual product costs are not reported on external reports
- Cost of goods sold are not broken down by product
- External reports are less detailed than internal reports prepared for decision making
- Limitations
- More costly to implement and maintain than a traditional costing system
- Activity-based costing by cause resistance because management is aften accustomed to traditional costing systems
- Can be easily misinterpreted
- More costly to implement and maintain than a traditional costing system
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