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time required to perform an activity; a higher level measure than a simple transaction driver; machine set up hours
batch level activity
done once for a bunch of units; set up copy machine once specify color, staple left, and make 200 copies
product level activity
carried out for entire product line, regardless of how many batches of product you'll make, or how many units any one batch will contain; food recipe
customer level activity
done for a customer as opposed to for the product the customer buys; sales calls
organization sustaining activity
supports production, supports long term decision not affect by short term fluctuations in products or volumes
activity based management
study activities, their costs, and how products use them. discover ways to improve production processes, remove non-value adding steps and costs, and increase efficiency and capacity w/o increasing costs
difficult and often costly to remove and can seriously impair other aspects of the business if care if not taken in reducing these costs
charges all manufacturing overhead, fixed and variable, to units of product(full costing)
job order costing
way of organizing work in process, that that each batch of product is distinguished from other batches of the same product, or other products
homogenous product, continuous production, keeps track of WIP by department instead of job; unit product cost- total Manufacturing cost during pd./total units completed
part of an organization whose manager has control over cost, profits, and/or investments
Supports the company's strategy: a plan for achieving goals, Performance measures that employees can understand and carry out; emphasis not on meeting goals but on improvement
needed when one segment of a company provides goods or services to another segment of the same company and both managers have profit responsibility
occurs when managers do not act in the best interest of the company although they may be benefiting their own segment
no opportunity cost b/c enough capacity exists to product the transferred units w/o any effect on sales to outside customers
split off point
where you complete processing the single input and have to decide whether to make end products and how many(where joint products can be recognized as individual products)
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