Traditional cost systems usually rely Traditional cost systems usually rely on volume measures such as direct labor on volume measures such as direct labor. hours and/or machine hours to[r]
Trang 1PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A Booker, Ph.D., CPA, CIA Cynthia J Rooney, Ph.D., CPA
Copyright © 2014 by The McGraw-Hill Companies, Inc All rights reserved.
Activity-Based Costing:
A Tool to Aid Decision Making
Chapter 6
Trang 2Activity–Based Costing (ABC)
ABC is designed to
provide managers with
cost information for
strategic and other
decisions that
potentially affect
capacity, and therefore,
affect “fixed”
as well as variable
costs.
ABC is a
to our traditional cost system
I agree!
Trang 3Activity–Based Costing
ABC differs from traditional cost accounting in three ways
Manufacturing
costs
ABC assigns both types of costs to products
Traditional product costing
ABC product costing Nonmanufacturing
costs
Trang 4How Costs are Treated Under
Activity–Based Costing
ABC does not assign all manufacturing costs to products
ABC differs from traditional cost accounting in three ways
Manufacturing
costs
Nonmanufacturing
costs
Traditional product costing
ABC product costing
Trang 5Activity–Based Costing
Plantwide Overhead Rate
Plantwide Overhead Rate
Departmental Overhead Rates
Departmental Overhead Rates
Activity–Based
Costing
Activity–Based
Costing
Number of cost pools
ABC uses more cost pools
ABC differs from traditional cost accounting in three ways
Trang 6How Costs are Treated Under
Activity–Based Costing
Each ABC cost pool has its
own unique measure of activity.
Each ABC cost pool has its
own unique measure of activity.
Traditional cost systems usually rely
on volume measures such as direct labor hours and/or machine hours to allocate
all overhead costs to products.
Traditional cost systems usually rely
on volume measures such as direct labor hours and/or machine hours to allocate
all overhead costs to products.
ABC differs from traditional cost accounting in three ways
ABC uses more cost pools
Trang 7Activity consumption of overhead An event that causes the
resources.
Activity
Cost Pool
A “cost bucket” in which costs related to a single activity measure are accumulated.
$
$
$
$
Activity–Based Costing