Video - Activity Based Costing Flashcards
Activity Based Costing Hierarchy
1 Facility-level activities
2 Product sustaining-level activities
3 Batch level activities
4 Unit level activities
Does ABC have larger or smaller cost pools than traditional product costing
larger number of cost pools that can be more closely aligned to products
ABC tends to shift costs….
Away from high-volume, simple products to lower volume, complex products
Traditional systems tend to overcast ___________ and undercuts ____________
high volume products
low volume products
Effects of adopting ABC
more precise measure of costs
more cost pools
more allocation bases
2 objectives of process management
1 increase mgr understanding
2 eliminate waste
Business Process Re-Engineering
process analysis that results in radical change; extreme transformation
Name some examples of process management tools
Outsourcing
Shared services
Offshoring
Outsourcing
contracting a business process to an external provider
Shared services
provide an essential business where previously it had been provided by multiple parts of the organization
Offshoring
where a process is moved to a foreign country
Another name for cost drivers in ABC costing
Allocation bases
