Activity-Based Costing

Overhead Allocation Problems

Product Cost Distortion

Changing Manufacturing Environment

Activities and Activity Cost Pools

Cost Drivers

Activity Hierarchy

Step 1: Identify Activities

Step 2: Assign Costs to Activity Cost Pools

Step 3: Calculate Activity Rates

Step 4: Assign Costs to Cost Objects

Service Activity Identification

Cost Driver Selection

Implementation Challenges

Improved Cost Accuracy

Better Decision Making

Implementation Costs

Complexity Issues

Process Improvement

Activity Elimination

Performance Measurement