![]() The proper distinction is made between the cost behavior patterns.ģ. ![]() fixed cost and variable cost which is necessary to provide quality information to design a suitable cost system in a manufacturing concern.Ģ. The total cost is divided into two types i.e. The features or characteristics of Activity Based Costing are briefly explained below.ġ. Features or Characteristics of Activity Based Costing A cost driver is an activity which generates cost. Under ABC system, some activities are responsible for the determination of cost of a product. ![]() long term variable costs are varying but not immediately.įor example production scheduling costs can be changed in the long term by changing number of runs rather than changing number of units produced. But, only variable costs are variable in the short term. The reason is that all the costs are variable in the long run. Kaplan and Cooper of Harvard Business School who have developed new accounting methodology in costing to calculate product costs. ![]() The collection of financial and operation performance information tracing the significant activities of the firm to product costs. ![]() ordering, setting up, assuring quality.ĭefinition by CAM-1 Organization of Arlinton Texas, Cost attribution to cost units on the basis of benefit received from indirect activities e.g. ![]()
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