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What are the cost drivers which are used in apportioning overheads cost under activity based budgeting?
Wiki User
∙ 10y ago
Cost drivers are activities due to which cost incurred for expample as many time as machines are setup for production as many time machine setup cost will be incurred so matchine setup is cost driver.
Wiki User
∙ 10y ago
Wiki User
∙ 10y agoCost drivers are activities due to which cost incurred for expample as many time as machines are setup for production as many time machine setup cost will be incurred so matchine setup is cost driver.
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How would you describe an activity-based budget?
Activity-based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.
How an activity-based capital budget differs from a conventional capital budget and describe the impact of activity based costing on capital-budgeting decisions?
Activity based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.Conventional capital budgetingConventional: Based on or in accordance with general agreementCapital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.
What are the two stages of allocation in activity-based costing?
Identifying the activities and identification of cost drivers
What are the two stages of allocation in activity based costing?
Identifying the activities and identification of cost drivers
Difference between activity based costing and job costing?
Activity Based Costing (ABC) is one of several approaches to job costing. Traditionally, job costing has been measured by allocating all direct costs associated with a certain job as well as 'a fair share' (usually based on direct labour hours or volume) of the total indirect costs/overheads incurred across all product lines. This traditional approach was appropriate to production that was labour-intensive, attracted a low level of overheads and enjoyed a fairly uncompetitive market. In more modern times however, production is increasingly machine-driven, overheads are higher (due to more rapid depreciation of equipment, maintenance and electricity costs) and products compete in a global market. Activity Based Costing seeks to identify the causes (or drivers) of indirect costs and apply them more selectively to particular 'activities'. This means that product lines which are simple and quick to make in large quantities will be 'costed' more competitively, only including overhead costs 'caused' by that particular job; while smaller more specialised product lines will be costed at a higher rate. Under a traditional job costing approach which allocates overheads in proportion to volume, the simple product line producing large quanities would have attracted a far greater share of the indirect costs making it less competitive in the marketplace.
How would you describe an activity based budget?
Activity-based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.
How would you describe an activity-based budget?
Activity-based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.
What are the cost drivers of activity cost budgeting?
Cost drivers are the actual activities due to which costs incurres like machine setup cost. As many time there is machine setup as many times there is machine setup cost to be incurred.
How an activity-based capital budget differs from a conventional capital budget and describe the impact of activity based costing on capital-budgeting decisions?
Activity based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.Conventional capital budgetingConventional: Based on or in accordance with general agreementCapital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.
What are the two stages of allocation in activity-based costing?
Identifying the activities and identification of cost drivers
What are the two stages of allocation in activity based costing?
Identifying the activities and identification of cost drivers
Cost allocation bases in activity-based costing should be a. cost drivers b. value-added activities c. activity centers d. processes?
C
Difference between activity based costing and job costing?
Activity Based Costing (ABC) is one of several approaches to job costing. Traditionally, job costing has been measured by allocating all direct costs associated with a certain job as well as 'a fair share' (usually based on direct labour hours or volume) of the total indirect costs/overheads incurred across all product lines. This traditional approach was appropriate to production that was labour-intensive, attracted a low level of overheads and enjoyed a fairly uncompetitive market. In more modern times however, production is increasingly machine-driven, overheads are higher (due to more rapid depreciation of equipment, maintenance and electricity costs) and products compete in a global market. Activity Based Costing seeks to identify the causes (or drivers) of indirect costs and apply them more selectively to particular 'activities'. This means that product lines which are simple and quick to make in large quantities will be 'costed' more competitively, only including overhead costs 'caused' by that particular job; while smaller more specialised product lines will be costed at a higher rate. Under a traditional job costing approach which allocates overheads in proportion to volume, the simple product line producing large quanities would have attracted a far greater share of the indirect costs making it less competitive in the marketplace.
What factors contributed to the emergence of activity based costing in the 1980s?
The Traditional costing system used to allocate/assign overhead costs to products by using only volume based cost drivers. In fact, these traditional systems were designed decades ago when most companies manufactured a narrow range of products, and direct labour and materials were the dominant factory costs. Overheads costs were relatively small and the distortions arising from inappropriate overhead allocations were not significant. Danish Ayub
What does cost allocation mean?
a factor that determines the cost of an activity. Cost drivers are analyzed as part of activity based costing and can be used in continuous improvement programs. They are usually assessed together as multiple drivers rather than singly. There are two main types of cost driver: the first is a resource driver, which refers to the contribution of the quantity of resources used to the cost of an activity; the second is an activity driver, which refers to the costs incurred by the activities required to complete a particular task or project.
Which state has most car accidents caused by texting?
Sufficient reliable statistics have yet to be gathered on this particular type of activity as it is only a relatively recent phenomenon, and most drivers will deny to the investigating officer that they were distracted by their phone activities. Law enforcement is now in the practice of confiscating drivers phones and reviewing their call activity log to determine whether or not the phone was is is use at the time of the collision. Also - insurance companies, especially in the case of large claims and/or lawsuits, are beginning to subpoena phone carrier records to learn the phone activity of the drivers in the accident.
What is activity based costing?
Activity Based Costing(ABC) Is a more recent approach to product costing ,pioneered by Professor Kaplan and Cooper . ABC is an attempt to reflect more accuratly in product costs those activities wich influence the level of support overheads includes such items as Inspection, Dispatch, Production Planing , Set up, tooling and similar costs. ABC system uses many drivers as absorption bases. Because of this , it claims that the use of ABC and several cost driver rates produces more realistic product or service cost specialy when the support costs are high.
