Financial and Managerial Accounting

Chapter 18 Activity-Based Costing

Learning Objectives

After studying this chapter, you should be able to:

1. Recognize the difference between traditional costing and activity-based costing.
2. Identify the steps in the development of an activity-based costing system.
3. Know how companies identify the activity cost pools used in activity-based costing.
4. Know how companies identify and use cost drivers in activity-based costing.
5. Understand the benefits and limitations of activity-based costing.
6. Differentiate between value-added and non–value-added activities.
7. Understand the value of using activity levels in activity-based costing.
8. Apply activity-based costing to service industries.

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