Activity Based Costing:
Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.
Cost driver:
Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.
Overhead rate:
Overhead rate is also known as the indirect cost rate which is used to allocate the indirect cost or overhead cost with the associate product or with the associate department.
To calculate: The contribution to profit from each customer last year and comment on that.
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Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
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- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College