Flashcards in Activity Based Costing (ABC) Deck (4):
Cost Rate Formula
Cost Pool / Cost Driver
Costs decided up into groups after the firms analysis.
The factors that cause costs to change.
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.