Chapter 5: Activity-Based Costing (ABC) & Activity-Based ...
Chapter 5: Chapter 5: Activity-Based Costing (ABC)& Activity-Based Management (ABM)H 13 5 -1Horngren 13eA SIMPLE Costing SYSTEM5-2AN Activity-Based Costing SYSTEM5-3ABC s 7 StepsStep 1:Identify the products that are thechosen cost :IdentifythedirectcostsoftheproductsStep 2 3:Select theactivities and cost-allocation basesto 4:Identifytheindirect costsassociated with each cost-allocationbase( activity ).allocation base( activity ).Step 5:Compute therate per unitof each cost-allocation base( activity )used to allocate indirect costs to the(y) 6:Compute the indirectcosts allocatedto the 7:Compute thetotal costs of the productsby adding alldirect and indirect costs assigned to the HIERARCHIESIn an ABC system, costs are categorized on the basis of the different types of cost drivers utilized.
– Exam ppyples of this t yp e of cost include gg,,eneral administration , rent , and ... is used to cate ggyporize costs based on different t yp es of cost drivers—for example, costs that vary with each unit of a product versus costs that vary with each batch of products 22.
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