- 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
- activity cost poolThe costs assigned to a particular activity
- activity driverEvent that causes consumption of an activity
- 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
