ABC/activity based costingAlternative costing method for strategic management; divides production into activities, defines costs for activities, and allocates costs to objects based on activity consumption
activityAn event that gives rise to the consumption of resources
batch-level activityActivities that relate to each batch of production; independent of the number of units within that batch
cost objectThe output for which costing information is to be determined under ABC; can be product or service related, or customer, market, etc.
cost of production reportA report used in a process costing environment to tabulate the costs incurred within a particular stage/department
customer-level activityActivities that relate to each customer; independent of the volume of goods and services provided to the specific customer
entity-sustaining activityActivities that relate to an entity's ability to operate; independent of business volume
equivalent unitsA measure of physical units expressed in terms of finished units
market-level activityActivities that relate to the number of markets in which an entity operates; independent of the number of products, customers, etc.
process costingProcess costing is a method to allocate the total costs of production to homogenous units produced via a continuous process that usually involves multiple steps or departments
product-level activityActivities that relate to the number of products produced; independent of the number of units produced
resourceThe elements consumed by activities and cost objects
resource driverThe concept that activities create the need for resources which will be consumed in the production process
unit-level activityActivities that relate to the number of units of output; each additional unit of production requires another activity
weighted-average process costingA process costing technique where all units of production are assigned the same cost; determined by blending of current period costs with beginning inventory cost
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