Chapter 5 Flashcards
(31 cards)
A cost driver is either a(n) _____ consumption cost driver or a(n) _____ consumption cost driver.
Resource
Activity
Name the 3 steps in developing an activity-based costing system.
Identify resource costs and activities
Assign resource costs to activities
Assign activity costs to cost objects
Name the 4 levels of activities.
Unit-level
Batch-level
Product-level
Facility-level
An economic element needed or consumed to performed activities.
Resource
A factor that causes or relates to a change in the total cost of an activity.
Cost Driver
A measure of the frequency and intensity of demand placed on a resource by an activity.
Resource Consumption Cost Driver
A measure of the demand placed on the resources by products, services, or customer.
Activity Consumption Cost Driver
The type of cost driver used to assign resource costs to a particular activity or cost pool.
Resource Consumption
The type of cost driver used to assign activity cost pool costs to cost objects.
Activity Consumption
A costing approach that assigns resource costs to cost objects based on activities performed for the cost objects.
Activity-Based Costing
A procedure that assigns a firm’s resource costs to cost pools and then to cost objects.
Two-Stage Cost Assignment
When using volume-based costing, cross-subsidization results in low-volume products being undercosted / overcosted and high-volume products being undercosted / overcosted.
Undercosted
Overcosted
The difference between the available capacity and the planned level of utilization.
Idle Capacity
The economic value of resources not utilized to produce products or provide services.
Idle Capacity Cost
A management technique that uses activity analysis and activity-based costing to help managers identify the value of activities and to make strategic performance management decisions.
Activity-Based Management
A diagram that identified each step in making a product or providing a service.
Process Map
Something that, in the eyes of the consumer, adds value to a product or service.
High-Value-Added Activity
Something that consumes time, resources, or space, but adds little in regard to satisfying customer needs.
Low-Value-Added Activity
Identifies customer service activities, cost drivers, and the profitability of each individual costumer or costumer group.
Costumer Profitability Analysis
The process of identifying cost activities and cost drivers related to servicing costumers.
Customer Cost Analysis
Name the 5 levels of customer costs.
Customer Unit-Level Customer Batch-Level Customer-Sustaining Distribution-Channel Sales-Sustaining
The net present value of estimated future profits from a given customer.
Customer Lifetime Value
The assignment of resource costs to certain activities that, in turn, are assigned to other activities before being assigned to the final cost objects.
Multistage ABC
A comprehensive and fully integrated management accounting approach that provides management with decision support information based on an operational view of the organization.
Resource Consumption Accounting
