Activity Based Costing Flashcards
1
Q
Abc aims
A
To apply overhead to products in a fairer way
2
Q
Designing an ABC
A
It can be time consuming
The initiative to implement activity based costing must be strongly supported by top management
The design and implementation of an ABC system should be the responsibility of a cross functional team rather than of the accounting department
3
Q
Steps for implementing ABC
A
Identify and define activities and activity pools
Where possible trace costs to activities and cost objects
Assign costs to activity pools
Calculate activity rates
Assign costs to cost object
Prepare management reports
4
Q
Criticisms of ABC
A
Costs can exceed the benefits of improved accuracy
Single cost drivers are not always appropriate
Implanting ABC is problematic
Managers do not understand it
