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PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
7-2
ABC is a
ABC is designed to good supplement
provide managers with to our traditional
cost information for cost system
I agree!
strategic and other
decisions that
potentially affect
capacity, and therefore,
affect fixed
as well as variable
costs.
7-3
Manufacturing Nonmanufacturing
costs costs
Traditional ABC
product costing product costing
Manufacturing Nonmanufacturing
costs costs
Some
All
Traditional ABC
product costing product costing
ActivityBased
Costing
Departmental
Overhead
Rates
Plantwide
Overhead
Rate
An allocation base
in an activity-based
costing system.
7-9
Transaction Duration
driver driver
ABC defines
five levels of activity
that largely do not relate
to the volume of units
produced.
Manufacturing
companies typically combine
their activities into five
classifications.
Product-Level Customer-Level
Activity Organization- Activity
sustaining
Activity
7-12
Strong top
management support
Link to evaluations
and rewards
Cross-functional
involvement
7-13
ABC Limitations
Substantial resources Resistance to
required to implement unfamiliar numbers
and maintain. and reports.
Appendix 7B
End of Chapter 07
Quiz Chap 07: click here