The approach of activity-based costing is to determine the activities that drive costs in the manufacturing process. Then based on the level of those activities, assign overhead cost. The goal is to find the most accurate predictors of cost behavior in order to make good decisions.
Upon successful completion of this discussion, you will be able to:
- Justify the costs of the units produced under an activity-based costing system.
- Classify overhead costs into activity cost pools.
- Evaluate product costs related to switching to an activity-based cost system.
- Evaluate the cost-benefit of implementing an activity-based cost system.
- Reflect on biblical principles in relation to managerial accounting.
- Textbook: Managerial Accounting
As we look at activity-based costing, understanding the ethical issues that can arise is important. For this discussion, we will be looking at a specific decision and the choices that arise. We want to focus on the outworking of this scenario and home in on the ethical dilemma presented.
- Review the rubric to make sure you understand the criteria for earning your grade.
- Read Chapter 4 in Managerial Accounting.
- Refer to the Skills Development Case S4-3, “Implementing ABC and Ethical Dilemmas,” at the end of Chapter 4. Read the case study thoroughly and respond to the questions following the case.
- Submit a one-page document with your response to Case S4-3. Discuss how the following verses inform our decision in this scenario: