Cost Accounting Chapter 4 Activity-base management & activity-based costing

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Author:
Hunterp
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124960
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Cost Accounting Chapter 4 Activity-base management & activity-based costing
Updated:
2011-12-23 19:31:12
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Cost Accounting Chapter Activity base management activity based costing
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Cost Accounting Chapter 4 Activity-base management & activity-based costing
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  1. Total cycle time (lead time)
    • the time from the receipt to completion of an order for a product or service
    • Total cycle time = VA time + NVA time
  2. Manufacturing cycle efficiency
    MCE = VA time / total cycle time
  3. Cost driver
    factors that have direct cause-and-effect relationships to cost.
  4. Activity-based management (ABM)
    • a business process model that focus on controlling production or performance activities to improve customer value and enhance profit.
    • 1. Activity analysis; 2. Cost driver analysis; 3. Activity-base costing; 4. Continuous improvement; 5. Operational control; 6. Quality management; 7. Business process improvement; 8. Performance measurement.
  5. Unit-level costs
    • Incur once for each unit produced.
    • direct material, direct labor, some machine costs (if traceable, eg. machine energy)
  6. batch-level costs
    • incur once for each batch produce.
    • purchase orders, setup, inspection, material handling, movement, scrap (if related to the batch
  7. Production/ Process-level costs
    • Support a product type or a process.
    • Engineering change order, equipment maintenance, product development, scrap (if related to product design)
  8. Organizational/facility-level costs
    • Support the overall production or service process
    • building depreciation, plant or division manager's salary, organizational advertisement.

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