Idea behind activity-based costing, Cost Accounting

Idea behind Activity-Based Costing

The most important ideas behind activity-based costing are as given as:

  1. Activities cause costs; activities involve ordering, machining, materials handling, assembly, production dispatching and scheduling,
  2. Products make demand for the activities
  3. Costs are assigned to products upon the origin of a product's consumption of the activities.

Therefore absorption rates under ABC should be more closely linked to such cause of overhead costs and hence product costs should therefore be more realistic especially where support overheads are high.

Posted Date: 2/5/2013 7:43:20 AM | Location : United States







Related Discussions:- Idea behind activity-based costing, Assignment Help, Ask Question on Idea behind activity-based costing, Get Answer, Expert's Help, Idea behind activity-based costing Discussions

Write discussion on Idea behind activity-based costing
Your posts are moderated
Related Questions
Account Analysis Method of Cost Estimation By Utilizing account analysis, the accountant classifies and examines each ledger account like variable mixed or fixed. Into their v

Determine the Joint Cost A company produces three products, Y1, Y2, and Y3 in the similar process.  The data below reflects average monthly results as:

The employees at Warren Manufacturing Company are unionized. As minimum requirements, the union members insist on keeping a work force of at least 300 workers, and accepting an hou

Economic Order Quality or EOQ Define the model and the three methods of computing the EOQ. 1. Assumptions of the model. Illustration The given information was extra

Operation and Design of Cost Accounting Systems A number of features should be taken into account previously to finalizing the design of a cost and management accounting syste

You sell a machine for $600,000. You allow the client to pay 1/3 at the time of the sale and 1/3 at the end of year one and 1/3 at the end of year two. The company earns 10% on ass

Flying High Company manufactures model airplanes. During the month, it manufactured 10,000 airplanes. Each one used an average of 6.5 direct labor hours and an average of 1.5 sheet

Radovilsky's Department Store in Haywood, California, maintains a successful catalog sales department in which a clerk takes orders by telephone. If the clerk is occupied on one li

Weston Corporation manufactures a product that is available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced

Amanda Deal, president of XYZ, had recently finished an arduous round of meetings with her financial staff". Those meetings dealt with the details necessary to produce an accurate