Week 6 Notes
Week 6 Notes Acct 3323
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This 1 page Class Notes was uploaded by Laura Notetaker on Friday October 2, 2015. The Class Notes belongs to Acct 3323 at University of Texas at El Paso taught by Marjorie A Marinovic in Fall 2015. Since its upload, it has received 41 views. For similar materials see Cost Accounting in Accounting at University of Texas at El Paso.
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Date Created: 10/02/15
Week 6 Notes Total estimated overhead total estimated base To determine the best base either being direct labor hours machine hours etc This rate will be used to allocate overhead costs to all products Overcosting is when a product consumes a low level of resources but is allocated high costs per unit Undercosting is when a product consumes a high level of resources but is allocated low costs per unit Crosssubsidization is when a one product is undercosted then another product is overcosted This will cause the overcosted product seem less profitable than it is and the undercosted product is left with too little costs which seem more profitable than it is ABC costing system is perceived to produce superior costing figures due to the use of multiple drivers across multiple levels It is only good as the drivers are selected and their actual relationship to costs If the driver is chosen poorly there will be inaccurate costs Activity based management is a method that uses ABC as an integral part in critical decision making situations
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