Acc349 Reflection Summary

Weekly Summary Love accounting some other great week with lots of much needed information to grasp. one(a) advantage of Activity-Based follow system is it has more accurate overhead represent allocation because there are more woo pools, the cost in all(prenominal) pool are more similar, and allocation is establish on activities that cause overhead costs. It is more effective overhead cost give by focusing on processes or activities and focuses on relevant factors by assigning costs to any cost object that is of interest to management.Lastly, it allows crack management of activities by helping managers identify the causes of costs and the activities driving them. The disadvantages of Activity-Based Costing are its cost to implement and maintain first principle requires management loyalty and financial resources and its uncertainty with decisions remain and management must interpret ABC data with caution in making managerial decisions.Cost drivers are selected based on the ca sual relation, benefits received and reasonableness or fairness. Most of the cost drivers are related either to the volume of production or to the complexness of the production or marketing process. An overhead rate is calculated for distributively cost pool using the following formula Costs in activity cost pool/base. The base is, of course, the cost driver. Overhead costs are then allocated to each product according to how much of each base the product uses.Activity-based costing allocates overhead to multiple activity cost pools and assigns the activity cost pools to products and services by means of cost drivers. In ABC, an activity is any event, action, transaction, or work sequence that causes the incurrence of cost in producing a product or providing a service. A cost driver is any factor or activity that has a direct cause-effect family with the resources consumed.