Relationship between indirect costs and the product that causes these costs. Simple costing system has more indirect costs.ĥ-8 The choice between the different costing systems should be based on the causal The ABC approach classifies as many indirect costs as direct costs as possible.
#MODUL PRAKTIKUM ANATOMI FISIOLOGI MANUSIA PDF DRIVERS#
An ABC approach attempts to useĬost drivers as the allocation base for indirect costs, whereas a simple costing system generallyĭoes not. SimpleĬosting systems have one or a few indirect cost pools, irrespective of the heterogeneity in theįacility while ABC systems have multiple indirect cost pools. These activities are built up to compute the costs of products, and services, and so on. A single Indirect Cost Pool will result in at least the same information asĪBC, while the application of the simple method will be much easier and cheaperĥ-7 An ABC approach focuses on activities as the fundamental cost objects. The frequency and intensity of maintenance will differ, whileĥ-6 That is possible when you consider a company with a simple product and a simple Each maintenance department executes the same activities, but are focused onĪ different market segment, for instance, elevators in private houses, elevators in condominiums,Īnd elevators in office buildings. Use the cause-and-effect criterion, when possible, to identify the cost-allocation baseĥ-4 If the departments coincide with activities, so that if one activity pool takes place in oneĭepartment while another activity takes place in another department, then both allocationĥ-5 An example of such an organization would be the maintenance departments of anĮlevator company. Expand the number of indirect cost pools until each of these pools is moreģ. Classify as many of the total costs as direct costs as is economically feasible.Ģ. Reduces the use of broad averages for assigning the cost of resources to cost objects and providesīetter measurement of the costs of overhead resources used by different cost objects.ġ. Money, when they erroneously believe them to be profitable.ĥ-3 Costing system refinement means making changes to a simple costing system that Undercosting may result in companies selling products on which they are in fact losing Market share for products that a company erroneously believes are low-margin or even The marketing and operating decisions made based on that information.ĥ-2 Overcosting may result in overpricing and competitors entering a market and taking Uniformly to cost objects when the individual products or services, in fact, use those resources inīroad averaging, by ignoring the variation in the consumption of resources by differentĬost objects, can lead to inaccurate and misleading cost data, which in turn can negatively impact RajanĬHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENTĥ-1 Broad averaging (or “peanut-butter costing”) describes a costing approach that uses broadĪverages for assigning (or spreading, as in spreading peanut butter) the cost of resources