Chapter 3 Flashcards
activity
an event that causes the consumption of overhead resources
activity-based management
a management approach that focuses on managing activities as a way of eliminating waste and reducing delays and defects
activity cost pool
a “bucket” in which costs are accumulated that relate to a single activity measure in an activity-based costing system
activity measure
an allocation base in an activity-based costing system; ideally, a measure of whatever causes the costs in an activity cost pool
activity rate
an overhead rate in activity-based costing. each activity cost pool has its own activity rate which is used to assign overhead to products and services
batch-level activities
activities that are performed each time a batch of goods is handled or processed, regardless of how many units are in a batch. the amount of resources consumed depends on the no of batches run rather than on the number of units in the batch
benchmarking
a systematic approach to identifying the activities with the greatest room for improvement. it is based on comparing the performance in an organization w the performance of other, similar orgs known for their outstanding performance
facility-level activities
activities that are carried out regardless of which products are produced, how many batches are run or how many units are made
product-level activities
activities that relate to specific products that must be carried out regardless of how many units are produced and sold or batches run
unit-level activities
activities that arise as a result of the total volume of goods and services that are produced, and that are performed each time a unit is produced
activity-based costing (ABC)
a two-staged costing method in which overhead costs are assigned to products on the basis of the activities they require
