Term
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Definition
| Total cost of each activity divided by the total activity |
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Term
| example of a Transaction Driver |
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Definition
| number of bills sent out to a customer |
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Term
| example of duration driver |
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Definition
| time spent preparing invoices |
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Term
|
Definition
| = activity cost / total activity |
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Term
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Definition
| simple counts of the number of times an activity occurs |
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Term
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Definition
| performed each time a unit is produced |
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Term
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Definition
| performed each time a batch is handled or processed regardless of how many units are in the batch. |
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Term
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Definition
| relate to specific products and typically must be carried out regardless of how many batches are run or units of product sold |
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Term
| Customer-level Activities |
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Definition
| relate to specific customers |
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Term
| Organizational-sustaining Activities |
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Definition
| carried out regardless of customer, product, batches, or units. |
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Term
| 1st step to implementing ABC |
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Definition
| identify the activities that will form the foundation for the system |
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Term
| Traditional Costing with High-volume products |
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Definition
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Term
| Traditional Costing with Low-volume products |
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Definition
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Term
| 1st step for implementing ABC |
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Definition
| Define activities, activity cost pools, and activity measures. |
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Term
| 2nd step for implementing ABC |
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Definition
-Uses activity rates to apply overhead
-Assigns overhead costs to activity cost pools. |
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Term
| 3rd step for implementing ABC |
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Definition
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Term
| 4th step for implementing ABC |
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Definition
| Assign overhead costs to cost objects |
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Term
| 5th step for implementing ABC |
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Definition
| Prepare management reports |
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Term
| the greater number of activities in an ABC system |
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Definition
| the more costly it is for the company to develop and more accurate costs will be |
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Term
| Activity-based Management |
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Definition
| how to use info from ABC to improve profitability by managing products, customers and resources |
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Term
| to reconcile ABC product margin to net income |
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Definition
| subtract overhead costs not assigned to products |
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Term
|
Definition
| process by which overhead costs are assigned to activity cost pools in an ABC system |
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Term
| most common reports prepared using ABC data |
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Definition
| are the product and customer profitability reports |
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Term
|
Definition
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Term
|
Definition
| choose the best cost driver for each pool |
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Term
|
Definition
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Term
|
Definition
| allocate overhead costs among cost objects |
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