Activity-based Costing

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5 Terms

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Activity-based costing

these type of costing is based on the idea that activities creates the cost and each product line should attract a share of production overhead costs based on that product line’s use of activities.

2
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Cost Drivers

These are the activities which creates the cost.

3
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What is the right cost driver for the cost of renting a property?

Occupying Floor Area

4
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Machine hours used

What cost driver to consider when using a machine which will cause the cost to increase?

5
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Number of production runs

What cost driver should be used to apportion the cost for setting up a machine?