11. Alternative costing principles Flashcards
1
Q
what’s changed in the modern factory? (3)
A
- less focus on direct labour
- production more complicated
- greater overheads
2
Q
why can absorption and marginal costing be inappropriate? (3)
A
- too little detail
- difficult to control cost
- allocation of cost can be unrepresentative
3
Q
what is abc?
A
activity based costing: use cost pools to determine cost drives. type of absorption costing but no arbitrary measure.
4
Q
+ / - of activity based costing (2 of each)
A
+ can be applied to services
+ improved cost control
- arbitrary allocation still required
- not always relevant
5
Q
what is target costing?
A
working backwards from market price using desired profits to determine maximum output on cost.
6
Q
what is lifecycle costing? what are the stages?
A
using the product lifecycle to determine cost.
development, introduction, growth, maturity and decline
7
Q
what are the three mian theories behind total quality management?
A
- get it right first time - cost of prevention less than cost or correction
2 continuous improvement
3 customer focus
8
Q
What are the four quality related costs? what can they also be known as
A
- prevention cost
- appraisal cost
AKA CONFORMANCE COSTS - internal failure costs
- external failure costs
AKA NON-CONFORMANCE COSTS
