Unit 4: Module 4 – M4 Assignment 1 Discussion
Assignment 1: DiscussionCost-Allocation Methods
According to Zelman, McCue, Glick, and Thomas (2014), activity-based costing (ABC) requires increased attention as compared to traditional, top-down cost-allocation methods. The assumption for ABC is that activities consume resources and products consume activities. Equally, the assumption is that if you can control activities or processes, then you can also control costs. The supposition is that if you can measure the resources an activity consumes, then you can provide a more accurate picture of costs as compared to the traditional, top-down cost-allocation method (Zelman et al., 2014).
In this assignment, you will compare and contrast traditional, top-down cost allocation and the ABC methodology. Using the module readings, Argosy University online library resources, and the Internet, respond to the following:
Describe traditional cost allocation.
Discuss costing terminology (direct costs and indirect costs) and cost drivers.
Identify the steps in ABC.
Discuss the differences between the ABC method and traditional cost allocation. What are the pros and cons of both ABC and traditional cost allocation?
In your opinion, is the ABC method better than traditional cost-allocation methods? Why or why not?
Give reasons to support your statements.
Write your initial response in approximately 300500 words. Apply APA standards to citation of sources.
By Saturday, October 1, 2016, post your response to the appropriate Discussion Area. Through Wednesday, October 5, 2016, review and comment on at least two peers responses. Explore any points you have not previously considered.
Zelman, W. N., McCue, M. J., Glick, N. D., & Thomas, M. (2014). Financial management of health care organizations (4th ed.). San Francisco, CA: Jossey-Bass.
DQ Grading Criteria Points
Initial response was:
Insightful, original, accurate, and timely.
Substantive and demonstrated advanced understanding of concepts.
Compiled/synthesized theories and concepts drawn from a variety of sources to support statements and conclusions. 16
Discussion Response and Participation:
Responded to a minimum of two peers in a timely manner.
Offered points of view supported by research.
Asked challenging questions that promoted discussion.
Drew relationships between one or more points in the discussion. 16
Wrote in a clear, concise, formal, and organized manner.
Responses were error free.
Information from sources, where applicable, was paraphrased appropriately and accurately cited. 8
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