Unit:each time a unit is produced

Batch: each time a batch is handled, regardless of units

Product: specific product, regardless of batches

Customer: specific customers

(i.e. sales calls, mailings, tech)

Organization: carried out regardless of which

customer is served

an allocation base in an activity-based costing system

"cost driver"

Transactional and Durational

count of the number of times an activity occurs

(e.g. number of bills, magezines, etc.)

the amount of time it requires to perform an activity

(e.g. time spent preparing bills, writing/printing magezines)

assigning functionally organized overhead costs derived from a company's general ledger to the activity cost pools.

Assign overhead costs to activity cost pools

Stage 1 Allocation:

Calculating activity rates

divide total cost of the activity by total activity

total cost / overhead cost = activity cost pool

Assign overhaed costs to cost objects (products and customers) based on activity rate

acvtivity rate x activity = ABC Cost

sales - (direct costs + activity cost pools)=

PROFIT MARGIN

sales - (direct costs + acvivity costs + Cust relations) =

Customer Margin

based on a planned level of activity

variable cost x quantity planned

Use actual level of activity but with planned costs

allow variable costs and revenues to vary

lists the number of units that must be produces to satisfy sales needs to provide for the desired ending inventory.

budgeted unit sales, add desired ending inventory finished goods and subract begining inventory of finished goods

(units only)

cash balance beginning, add receipts and subtract disbursements

eqaul to cash available for disbursements

if below min balance-borrow

if not-repay outstanding

= flexible budget cost

=standard price per unit x standard quantity per unit

=standard rate per hour x standard hours per unit

stdrd price per unit:

reflect the final delivered cost of direct materials

stdrd quantity per unit:

reflects the amount of material required to for each unit of finished product as well as an allowance for unavoidable wate. (e.g. waste, spoilage, rejects,etc.)

stdrd rate per hour:

includes hourly wages, employment taxes and fringe benefits

stdrd hours per unit:

the labor time require to complete a unit of production

=actual cost - standard cost

materials quanity variance

labor efficiency variances

=(act qt used x stdrd price)-(stdrdqt used x stdrd price)

=(act hrs x stdrd rate)-(stdrd hrs x stdrd rate)

materials price variance

labor rate variance

=(act qt x act price)-(act qt x stdrd price)

=(act hrs x act rate)-(act hrs x stdrd rate)

=act fixed ovrhd - bdgt fixed ovrhd