Chapter 4-1 Activity-Based Costing Managerial Accounting Fifth Edition Weygandt Kimmel Kieso Chapter 4-2 study objectives Chapter 4-3 1. Recognize the difference between traditional costing and activity-based costing. 2. Identify the steps in the development of an activity-based costing system. 3. Know how companies identify the activity cost pools used in activity-based costing. 4. Know how companies identify and use cost drivers in activitybased costing. 5. Understand the benefits
Premium Activity-based costing Cost accounting Management accounting
Chapter 4 Activity-Based Costing 4-1 4-2 Traditional Costing and Activity-Based Costing Traditional Costing Systems Allocates overhead using a single predetermined rate. ► Job order costing: direct labor cost may be the relevant activity base. ► Process costing: machine hours may be the relevant activity base. Assumption was satisfactory when direct labor was a major portion of total manufacturing costs. ► Wide acceptance of a high correlation between
Premium Costs Manufacturing Activity-based costing
for implementing technology-based learning activities. Implementing technology-based learning activities has challenges. One of the greatest challenges of implementing technology-based activities is meeting the technological needs of the students. In order to offset the challenge of implementing technology-based activities by meeting students’ needs‚ an alternative to broadband connected computers‚ has to be meet. The challenge of implementing technology-based activities by meeting students’ needs
Premium Education Educational psychology Learning styles
Strength of Activity Based Costing The major strength of activity based costing is the ability to estimate the cost of individual products and services precisely. By transferring overhead costs to individual units of products or services‚ ABC helps identify inefficient or non-profitable products or activities that help into the profitability of efficient processes or highly profitable products. 1. More accurate costing of products/services Product cost determination under activity-based costing is
Premium Cost Decision making Costs
Introduction Activity Based Costing (ABC) is a methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. By using ABC to assign the overhead costs to each activity‚ the following steps should be followed: 1. Identify and define activities using interviews and surveys. Then build a list of activities. • Activity name-usually consists of an action verb and an object.
Premium Costs Cost Cost accounting
Activity based costing (ABC) is a relative new way to allocate costs to specific processes and services. This system assures that the costs are accurately distributed to the products or services that generated them. ABC illustrates costs more accurately‚ giving management insight to the cost associated with certain business activities. ABC extends the decision-making skills of management by expanding on traditional costing (job order costing/process order costing) techniques. However‚ since ABC ’s
Premium Management accounting Activity-based costing Costs
Royal Dutch Shell in Nigeria 1. Does Shell bear some responsibility for the problems in the Ogoni region of Nigeria? I believe Shell is somewhat responsible for the problems. They seem to be taking advantage of a lower classed and less advanced country and its natural resources. If they had practiced better corporate responsibility then things would not have escalated as much. 2. What steps might Shell have taken to nip some of the protests against it in the butt‚ or even preempt
Premium Royal Dutch Shell Nigeria Human rights
Activity-Based Costing (ABC) is when you figure out the cost of activities to then discover the cost of products and services. ABC occurs in in four stages. These steps are as follows: identify activities and calculate their estimated total costs‚ identify the allocation base for each activity and estimate the total quantity of each allocation base‚ compute the predetermined overhead allocation rate for every activity‚ and allocate indirect costs to the cost object. I will use the production of a
Premium Costs Variable cost Cost
Management 307 Shell-Nigeria case The Business Ethics of Shell in Nigeria The Shell-Nigeria case has produced great debates about business practices and what is deemed ethical behavior. When applying the views of some of the great moral philosophers‚ economists‚ and philosophical concepts in history to the Shell-Nigeria case‚ one is left with a variety of diverse viewpoints about whether or not Shell’s business practices were ethical. Philosopher and economist‚ Adam Smith‚ would likely have
Premium Business ethics Ethics Morality
Cost Management Journal of A WARREN GORHAM LAMONT PUBLICATION Vol. 7‚ No. 1 Spring 1993 Target Costing at Toyota Activity-Based Costing in Cellular Manufacturing Systems Controlling Quality on a Multidimensional Level The Effect of JIT on Management Accounting Activity-Based Total Quality Management at American Express From the Editors / Barry J. Brinker Cost Management Practice / Steven C. Schnoebelen The Factory in Transition / Arun Maira Reprinted with permission from The
Premium Management Strategic management Learning