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I need some help to understand activity based costing … plz thats my request to all the members, plz assist me to understand abc costing … im so fed up in this topic …
I thought ABC wasn’t introduced until F5. Maybe if you post this in the F5 forum you might get more responses. Also, if you are able to say what you’re stuck on I can try and help (I passed F5 in December).
abc is not that hard. it is method of allocating overhead cost to products.
first, identify the activity costs and it cost drive.
eg. machine setup cost , which is an overhead cost.
possible cost drive is number of machine setup. in absorption costing, any activity cost is driven by volume of products.another ex. purchase order cost, possible cost drive is no. of purchase order.
second step.
cost per driver
like, machine setup cost per no of setup.
purchase order cost per no. of purchase order.third step,
allocate the overhead.
for product x, there were 20 purchase order, allocate then 20* purchase cost per no. of purchase order(from step 2 ).ABC calculations cannot be asked until Paper F5.
In Paper F2 the most you can be asked is just the basic idea (about how overheads are dealt with using ABC), but no numbers.- Topics: 0
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ABC costing tutorial!
uploaded it a few weeks back. My channel has quite a few managerial accounting videos. Check it out 🙂
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