Top Posters
Since Sunday
29
10
10
9
8
7
7
7
7
6
6
6
New Topic  
wrote...
Posts: 211
3 months ago
Discuss the three categories of overhead costs in an activity-based costing system.
Source  Download
Accounting Information Systems
Edition: 14th
Authors:
Read 35 times
3 Replies
Replies
Answer verified by a subject expert
wrote...
Posts: 190
3 months ago
Sign in or Sign up in seconds to unlock everything.
The three separate categories of overhead are: (1) Batch-related overhead. Examples include setup costs, inspections, and materials handling. Activity-based cost systems accumulate these costs for a batch and then allocate them to the units produced in that batch. Thus, products produced in large quantities have lower batch-related overhead costs per unit than products produced in small quantities. (2) Product-related overhead. These costs are related to the diversity of the company's product line. Examples include research and development, expediting, shipping and receiving, environmental regulations, and purchasing. Activity-based cost systems try to link these costs to specific products when possible. For example, if a company produces three product lines, one of which generates hazardous waste, an activity-based cost system would charge only that one set of products for all the costs of complying with environmental regulations. Other costs, such as purchasing raw materials, might be allocated across products based on the relative number of purchase orders required to make each product. (3) Companywide overhead. This category includes such costs as rent or property taxes. These costs apply to all products. Thus, activity-based cost systems typically allocate them using departmental or plant rates.
This verified answer contains over 180 words.
Related Topics
wrote...
3 months ago
This site is awesome!
wrote...
3 months ago
Slight Smile Good luck on the rest
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers.
Learn More
Improve Grades
Help Others
Save Time
Accessible 24/7
  176 People Browsing
Your Opinion
Who's your favorite biologist?
Votes: 40

Related Images
 477
 488
 36

▶️ Video: Skin Cancer

For a complete list of videos, visit our video library