Chapter 5 activity based costing and customer

The talents of students and teachers vary, as do their levels of preparedness and effectiveness in teaching and learning. At community colleges, for example, the student mix and to some extent instructor qualifications are typically quite unlike those for four-year research universities. In the composition of a student body, the following characteristics are widely acknowledged to affect educational outcomes and thus, the relationship between inputs and outputs: Economic inequality and mix of low-income and minority students.

Chapter 5 activity based costing and customer

After you have read and studied this chapter, you should be able to: Explain how activity based costing ABC fits into an overall cost accounting system. Describe the two main problems that tend to occur when companies use traditional costing.

Discuss the causes and directions of product cost distortions that occur in traditional costing. Explain the logic underlying ABC.

Chapter Outlines

Discuss how the concepts of fixed and variable costs are viewed in ABC. Explain the distinction between production volume and activity volume. Describe how activity measures are chosen when using the ABC approach.

Describe the ABC cost hierarchy. Explain the conceptual distinction between activities, drivers and activity measures.

Chapter 5 activity based costing and customer

Outline four steps involved in designing an activity based costing system or sub-system. Outline three additional steps required to obtain ABC product costs.

Compute product cost in relatively simple ABC problems. Discuss a controversial issue concerning how ABC should be used.

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Discuss the connection between ABC and the dichotomy of capitalism. INTRODUCTION The main purpose of this chapter is to introduce the concepts and terminology associated with activity based costing and to discuss how activity based concepts are used to produce more accurate product costs than those obtained in the traditional cost systems presented in Chapters 4, 5 and 6.

This chapter contains two relatively long sections and three fairly short sections. The first section places emphasis on the conceptual material underlying activity based costing and addresses the first nine learning objectives listed above.

The second section outlines the steps involved in using the ABC technique and provides two related examples that illustrate and compare ABC with traditional costing.

Chapter 5 activity based costing and customer

This section covers learning objectives 10 through The last section relates the emergence of activity based costing to the dichotomy of capitalism framework discussed in Chapter 1. This sub-section places activity based costing within the five part cost accounting system structure illustrated in Exhibit of Chapter 2.

Is ABC an input measurement basis, an inventory valuation method, a cost accumulation method, a cost flow assumption, a measure relating to the timing of data availability, or none of the above?

From our previous discussions in Chapters 2 and 6 recall that activity based product costing may be used as an alternative to the traditional inventory valuation methods, or as a separate stand alone, microcomputer based system designed only to obtain more accurate information for management decisions.

Then, activity based costs flow through the perpetual inventory accounts.Chapter 05 - Activity-Based Costing and Customer Profitability Analysis “Activity-Based Benchmarking and Process Management—Managing the Case of. CHAPTER 5: ACTIVITY-BASED COSTING AND CUSTOMER PROFITABILITY ANALYSIS QUESTIONS Undercosting a product may appear to have increased the reported profit the product earned (assuming the firm did not lower its selling price because of the reported lower product cost).

Read chapter 3 Why Measurement of Higher Education Productivity Is Difficult: Higher education is a linchpin of the American economy and society: teaching. Start studying Activity Based Costing and Customer Profit Analysis (Mac Chapter 5). Learn vocabulary, terms, and more with flashcards, games, and other study tools.

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Problem 66P: Customer-Profitability Analysis: Activity-Based CostingFresno Fiber Optics. Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing.

the cost management staff has recently completed a customer-profitability study.

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