Académique Documents
Professionnel Documents
Culture Documents
Activity-Based Costing
4-1
Unit-Level Product
Costing
Predetermined
overhead rate
4-2
Unit-Level Product
Costing Overhead Variances
Overhead Variances
Unit-Level Product
1
Costing
Overhead
Overhead Application:
Application: Departmental
Departmental
Rates
Rates
Departmental Rates
Costs assigned to individual production
4-5
Product Diversity
Even if there are significant non-unit driven
overhead costs, it will not cause distorted costing if
the products all consume overhead in the same
proportion as unit-level driven overhead costs.
Product diversity simply means that products
consume overhead activities in different
proportions.
This can be caused by differences in product
size, complexity, setup time, batch size, etc.
The proportion of each activity consumed by a
product is called the consumption ratio.
4-6
4-7
4-8
Comparison
Comparison of
of methods
methods
Two producing departments: molding and assembly.
Two products: race cars and robots.
Five times more race cars than robots are produced
4-9
Design
Design Steps
Steps for
for an
an ABC
ABC System
System
Identify, define, and classify activities and key
attributes.
Design
Design Steps
Steps for
for an
an ABC
ABC System
System
Assign the cost of resources to activities.
primary activities.
Design
Design Steps
Steps for
for an
an ABC
ABC System
System
Identify cost objects and specify the amount
Design
Design Steps
Steps for
for an
an ABC
ABC System
System
Calculate primary activity rates.
Primary activity rates are computed by dividing
budgeted activity costs by practical activity
capacity.
Practical activity capacity is the activity output that
can be produced when the activity is performed
efficiently.
Assign activity costs to cost objects.
Classifying
Classifying Activities
Activities
Classifying activities into categories aids in product
costing because the cost behavior differs by level.
The four levels are:
Unit-level
Batch-level
Product-level
Facility-level
4-14
Before-the-Fact
Before-the-Fact Simplification:
Simplification: TDABC
TDABC
4-15
After-the-Fact
After-the-Fact Simplification
Simplification
number of drivers.
4-16