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Study Guide Vol 2 t/a Accounting: Tools for Business Decision Makers, 5th Edition by Donald E. Kieso, Jerry J. Weygandt, Paul D. Kimmel

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Chapter 17

ACTIVITY-BASED COSTING

CHAPTER 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 the activity 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.

*9. Explain just-in-time (JIT) processing.

*Note: All asterisked (*) items relate to material contained in the Appendix to the chapter.

PREVIEW OF CHAPTER 17

Traditional costing systems are not the best answer for every company. Sometimes a traditional system can mask significant differences in its real cost structure. New management tools have been developed that allow businesses to gather more accurate data for decision-making purposes, including activity-based costing (ABC). The content and organization of this chapter are as follows:

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CHAPTER REVIEW

Traditional Costing And Activity-Based Costing

  1. (L.O. 1) Often the most difficult part of computing accurate ...

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