Utilizing this type of costing system for Glaser Health enhances their costing process in three ways. First, expand the number of cost pools that can be used to gather overhead costs. By eliminating accumulation of costs in one pool or preliminary stage costing driver like operations, the activity-based system allocates costs by activity. Preliminary stage can create new bases for assigning overhead costs to item costs are allocated based on the activities that generate costs instead of on volume measures, such as machine hours or direct labor costs. By using an activity-based costing system can change several indirect costs, making costs previously considered indirect- such as depreciation, inspection, or power- traceable to certain activities. Alternatively, an activity-based costing system transfers overhead costs from high-volume products to low-volume products, raising the unit cost of low-volume products.
Copyright 2019 - Education WordPress Theme.