Chapter 18 Activity-Based Costing



Learning Objectives

After studying this chapter, you should be able to:

  1. Recognize the difference between traditional costing and activity-based costing.
  2. Identify the steps in the development of an activity-based costing system.
  3. Know how companies identify the activity cost pools used in activity-based costing.
  4. Know how companies identify and use cost drivers in activity-based costing.
  5. Understand the benefits and limitations of activity-based costing.
  6. Differentiate between value-added and non–value-added activities.
  7. Understand the value of using activity levels in activity-based costing.
  8. Apply activity-based costing to service industries.


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