Activity Based Costing (ABC) Flashcards Preview

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Flashcards in Activity Based Costing (ABC) Deck (4):
1

Cost Rate Formula

Cost Pool / Cost Driver

2

Cost Pool

Costs decided up into groups after the firms analysis.

3

Cost Drivers

The factors that cause costs to change.

4

Benefits of ABC

Focus on what drives costs so it assigns a greater proportion of overhead to the cost units that create the greater proportion of overhead.
Generates a more accurate full cost figure.
Allows managers to be more effective in reducing costs as it’s clear what creates and drives costs up.