ACCT. CH3

Activity cost pool

is a cost bucket in which costs related to a particular activity measure are accumulated.

Bench Marking

is a systematic approach to identifying the activities that need the most improvement.

Departmental overhead rate

means that each department has a different predetermined overhead rate

Activity-based Costing

A technique that attempts to assign overhead costs more accurately to products.

Facility-level Activities

Activities carried out regardless of which products are produced. Example: management salaries, insurance, property taxes, and building depreciation.

Activity Rate

Is a predetermined overhead rate in an activity based costing system. Activity rate is computed by dividing total cost in the activity cost pool, by the activity level in the activity cost pool.

In activity- based costing, an activity measure is

an allocation base

Batch Level activities

setting up equipment, placing purchase orders and arranging shipments to customers are all examples.