Concept explainers
1
Activity based costing:
ABC is a system in which various activities are identified. At first, costs of activities are calculated and then such cost is allocated to all the products. Relationship among costs, products and activities, established under this system, helps in the allocation of cost process.
An activity rate for each activity cost pool.
2
Activity cost
Activity cost refers to the total cost that is incurred by each activity. This cost is calculated and then assigned to all the products with the use of a cost allocation base or measure.
To calculate:Total activity cost that will be assigned to city general and county general.
3
Purchasing behavior
Buying or purchasing
To describe: Purchasing behavior that would increase cost to serve the customers.
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EBK INTRODUCTION TO MANAGERIAL ACCOUNTI
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