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About this document
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- 4 pages
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- Subject
- Accounting, Business Management
This document contains multiple choice questions on Activity Based Costing. It covers the definition and principles of ABC, and how it helps in cost allocation and product costing. It is useful for students studying accounting and business management.
What's inside
- Definition of shared services
- Activity-based costing system
- Direct and value-adding costs
- Process management approaches
- Value-adding and nonvalue-adding activities
Who it is for: Students studying accounting and business management. (Undergraduate)
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Summary
Activity-based costing is a method of assigning manufacturing overhead costs to products. It uses multiple cost drivers to explain cost behavior. Students learn how to apply it to different business processes.
Shared services and costing
Shared services are defined. Activity-based costing uses multiple cost drivers. Students choose how to assign manufacturing overhead costs.
Direct and value-added costs
Direct and value-added costs are explained. Students decide how to categorize payments to employees. The effect of increasing orders on salary cost is discussed.
Process management approaches
Different process management approaches are named. Students identify which approach involves radical change. Business process reengineering is explained.
Activity-based costing in practice
Activity-based costing is applied to different business scenarios. Students identify value-adding and non-value-adding activities. The effect of inventory levels on cost is discussed.
Key terms
- Shared services
- One part of an organization provides an essential business process.
- Activity-based costing
- A method of assigning manufacturing overhead costs to products.
- Value-added cost
- A cost that, if eliminated, would reduce the value of the product to the customer.
- Cost driver
- An independent variable that helps to explain the behavior of cost.
- Business process reengineering
- A process analysis approach that typically results in radical change.
- Non-value-adding activity
- An activity that does not add to the value of the product as perceived by the customer.
Questions this document helps with
- What is activity-based costing?
- How do cost drivers work?
- What is the difference between value-adding and non-value-adding activities?
Summary written with AI from the document's text.
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