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Details

Ch. 5
Activity Based Costing and Activity Based Management
13
Accounting
Undergraduate 4
04/17/2013

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Cards

Term
Activity
Definition
an event, task, or unit of work with a specified purpose
Term
Activity-based costing (ABC)
Definition
approach to costing that focuses on individual activities as the fundamental cost objects. It uses the costs of these activities as the basis for assigning costs to other cost objects such as products or services
Term
Activity-based management (ABM)
Definition
method of management decision-making that uses activity-based costing information to improve customer satisfaction and profitability
Term
Batch-level costs
Definition
the costs of activities related to a group of units of products or services rather than to each individual unit of product or service
Term
Cost hierarchy
Definition
categorization of indirect costs into different cost pools on the basis of the different types of cost drivers, or cost-allocation bases or different degrees of difficulty in determining cause-and-effect (or benefits received) relationships
Term
Facility-sustaining costs
Definition
the costs of activities that cannot be traced to individual products or services but support the organization as a whole
Term
Output unit-level
Definition
costs the costs of activities performed on each individual unit of a product or service
Term
Product-costs cross-subsidization
Definition
costing outcome where one undercosted (overcosted) product results in at least one other product being overcosted (undercosted)
Term
Product overcosting
Definition
a product consumes a low level of resources but is reported to have a high cost per unit
Term
Product-sustaining costs
Definition
the costs of activities undertaken to support individual products regardless of the number of units or batches in which the units are produced
Term
Product undercosting
Definition
a product consumes a high level of resources but is reported to have a low cost per unit
Term
Refined costing system
Definition
costing system that reduces the use of broad averages for assigning the cost of resources to cost objects (jobs, products, services) and provides better measurement of the costs of indirect resources used by different cost objects- no matter how differently various cost objects use indirect resources
Term
Service-sustaining costs
Definition
the costs of activities undertaken to support individual services
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