Term
| Direct labor is still often the appropriate basis for assigning overhead costs when |
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Definition
Direct labor constitutes a significant part of total product cost and
High correlation exists between direct labor and changes in overhead costs. |
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Term
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Definition
-Can be expensive to use
-Some arbitrary allocations continue |
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Term
| Reason ABC is a more adequate cost system |
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Definition
-Use of more cost pools to assign overhead costs
-Enhanced control over overhead costs
-Better management decisions |
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Term
| Use ABC When One or More of the Following Exist: |
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Definition
-Products differ greatly in volume/manufacturing complexity
-Products lines are Numerous,Diverse and Require different degrees of support services
-Overhead costs are a significant portion of total costs
-Significant change in manufacturing process or number of products
-Managers ignore data from existing system and instead use “bootleg” costing data |
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Term
| Look At JIT Slide 4: 15-16 |
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Definition
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