Unit 8 ABC

System

Hiya All

I need help I missed the class about Activity Based Costing does anyone know anything about this.

Also have you an easyway of learning the standard costing to remember which you take from what?

Any help would be grateful

System

Re:Unit 8 ABC

Activity Based Costing is where the indirect costs are gathered into cost pools eg goods inwards and then the cost driver for each pool is determined, eg no of boxes received. The total costs are then divided by the cost driver to give the rate to charge the costs to the units of output.

Each production unit type is then charged on the basis of how much usage it makes of each cost pool. For example, Product A has 10 boxes received and Product B has 20 boxes received then Product B will be charged more of the cost from the goods inward cost pool. For example, if overheads allocated to goods inwards are �£30,000 and 30 boxes are to be received, this works out at �£1,000 charge per box. Product A would be charged �£10,000 and Product B charged �£20,000.

ABC Costing is a development on from absorption costing so instead of apportioning by direct labour hours, for example, the costs are absorbed by usage of the cost pool. So a product with many different types of parts received is charged more than product with only one type of part received and therefore it is a more accurate basis for apportioning overhead costs than standard absorption costing.

I hope this helps!!

System

Re:Unit 8 ABC

Thank you it make more snce now.