Chapter 7 Flashcards
1
Q
ABC costing differs from traditional costing in two ways:
A
- assigns both manufacturing and non manufacturing to products
- doesn’t assign all manufacturing costs to products
- uses more cost pools
2
Q
costing method designed to provide managers w/ cost information for strategic and other decisions that potentially affect capacity, fixed, and variable costs
A
ABC costing
3
Q
event that causes consumption of overhead resources
A
activity
4
Q
cost bucket in which costs related to a single activity measure are accumulated
A
activity cost pool
5
Q
cost driver or an allocation based in an ABC system
A
activity measure
6
Q
What are the characteristics of successful ABC implementations?
A
- strong top management support
- cross-functional involvement
- link to evaluations and rewards
7
Q
Most companies do not use ABC for external reporting because…
A
- less detailed than internal reports
- difficult to make changes to company accounting system
- does not conform to GAAP
- auditors may be suspect of the subjective allocation process
