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Allocates overhead to multiple activity pools and assigns the activity cost pools to products and services by means of cost drivers.

1- variations in the level of a single activity (the cost driver) explain the variations in teh related total cost. 2- cost behavior is approximated by a linear cost function within the relevant range.

Cost Driver. A variable, such as the level of activity or volume, that causally affects costs over a given time span. Anything that causes changes in total ...

Start studying cost chapter 3. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

Accounting questions and answers. 1) A cost driver: Select one: a. Is a factor that causes cost b. May also be a resource driver c. Is a unit of work performed within the organisation d. A and B e. A and C 2) During the month of April, direct labor cost totaled $25,000 and direct labor cost was 25% of prime cost.

Start studying Cost ch 5. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

Start studying 3.3 Cost Drivers. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

a modern approach to costing that has made major advances in analysing cost behaviour by classifying costs and cost drivers into four distinct levels.

-traditional costing systems assign overhead as a single cost pool with a ... -cost drivers used in ABC are activity bases that are closely correlated with ...

Start studying 3.3 Cost Drivers. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

Identify the cost drivers (allocation based) associated with each activity. Compute a cost rate per cost driver. Assign costs by multiplying the cost drive ...

What is a cost driver? A cost driver is any output measure that is believed to cause costs to fluctuate in a predictable manner. Give three examples of costs and their possible cost drivers. Direct labor costs−Driven by direct labor hours. Support costs−Driven by product complexity. Materials costs−Driven by levels of product output.

costs flow through three inventory accounts in a manufacturing firm raw materials or material inventory (the cost of the supply of materials used in the manufacturing process or to provide the service), WIP (which containing all costs put into the manufacture of products that are started but not completed at the financial statement date) and finished goods inventory (the costs of …

What is a cost driver? Cost driver: a factor that causes or relates to a change in the cost of an activity. Cost drivers cause or relate to cost changes, measured or quantified amounts of cost drivers are excellent bases of assigning resource costs to activities and for assigning the cost of activities to cost objects. Define Activity-based costing

A) All the cost drivers should be unit-‐‑level cost drivers. B) There should be a clear cause-‐‑and-‐‑effect relationship between cost drivers and cost pools. C) Cost drivers are independent variables. D) A single cost driver should be identified for all the activities.

relate to the amount produced or quantity or service provided. the relationship between the cost driver and total cost is approximately linear within the relevant range. the cost drivers the output of complete units, the quantity of direct materials and the hours of direct labor are all volume based cos drivers are proportional to each other

C.is a two-stage overhead cost allocation system that identifies activity cost pools and cost drivers. D.uses direct labor as its primary cost driver.

Cost driver: a factor that causes or relates to a change in the cost of an activity. Cost drivers cause or relate to cost changes, measured or quantified ...

10. A cost driver a. causes fixed costs to rise because of production changes. b. has a direct cause-effect relationship to a cost. c. can predict the cost behavior of a variable, but not a fixed, cost. d. is an overhead cost that causes distribution costs to change in distinct increments with changes in production volume.

Three cost drivers are used to estimate the cost of processing insurance claims. The cost drivers are: (1) claim amount, (2) age of vehicle in accident and (3) age of driver in accident. The percentages attributable to the cost drivers are 50% for claim amount, and 15% for each of the other two cost drivers.

Costs, Cost Drivers, Cost Objects, and Cost Assignment. Terms in this set (28) Cost. What a company incurs when it uses a resource for some purpose. Cost Pools. meaningful groups into which costs are collected.

Terms in this set (32) Cost Behavior. the relationship between a cost and the cost driver. Cost Estimation. the process of determining the cost behaviour of a particular cost item. Cost Prediction. using knowledge of cost behaviour to forecast the level of cost at a particular level of activity. Volume-based Cost Driver.

Accy Chapter 13. A. the price paid for a raw material. B. the wage paid to a worker. C. the price charged by an entity for its services. D. all of the above. A. accumulation and determination of product, process or service cost. B. income measurement and inventory valuation. C. generally accepted accounting principles.

A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs. false Job-order costing systems often use allocation bases that do not reflect how jobs actually use overhead resources.