In cost accounting, besides looking at marginal and total costing, we have the activity-based costing where the stages or process involves the following:
Different stages/steps in activity-based costing are:
- Identify the different activities within the organization
- Relate the overheads cost to the identified activities
- Support activities are then spread across the primary activities
- Determine the activity drivers
- Calculate the activity cost driver rates
- Compute the overhead cost to be charged over the product by using cost driver rates
[ read about cost driver & business units with their different type of cost driver] |