Activity Based Costing: Activity Based Costing refers to the allocation of the factory overheads when there are numerous products and processes. Activity based costing aims at assigning the costs among the products in a proportionate way. Activity cost pool: Activity cost pool refers to the overhead cost related to an activity. This is often calculated to get an accurate estimate of the production cost. To Identify: The possible activity cost pool in the operation of Company EVH.
Activity Based Costing: Activity Based Costing refers to the allocation of the factory overheads when there are numerous products and processes. Activity based costing aims at assigning the costs among the products in a proportionate way. Activity cost pool: Activity cost pool refers to the overhead cost related to an activity. This is often calculated to get an accurate estimate of the production cost. To Identify: The possible activity cost pool in the operation of Company EVH.
Solution Summary: The author identifies the possible activity cost pool in the operation of Company EVH. Activity Based Costing aims at assigning the costs among the products in a proportionate way.
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
Chapter 4, Problem 4.1BYP
a)
To determine
Activity Based Costing: Activity Based Costing refers to the allocation of the factory overheads when there are numerous products and processes. Activity based costing aims at assigning the costs among the products in a proportionate way.
Activity cost pool: Activity cost pool refers to the overhead cost related to an activity. This is often calculated to get an accurate estimate of the production cost.
To Identify: The possible activity cost pool in the operation of Company EVH.
b)
To determine
Activity Based Costing: Activity Based Costing refers to the allocation of the factory overheads when there are numerous products and processes. Activity based costing aims at assigning the costs among the products in a proportionate way.
Cost Driver: The cost driver refers to the all the activities on which the money is spent to produce the product or the service. It has a cause-effect relationship with the resources utilized in production. The cost drivers are used to form the activity cost pools.
To Identify: The possible activity cost driver in the operation of Company EVH.
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Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning