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Part $1$

What is costing system$$ refinement? What are the three guidelines for$$ refinement?

Question content area bottom

Part $1$

Costing system refinement

A$.$

means making changes to a simple costing system that reduces the use of broad averages for assigning the cost of resources to cost objects and provides better measurement of the costs of overhead resources used by different cost objects.

B$.$

is a process used to categorize various activity cost pools on the basis of the different types of cost$$ drivers, or$$ cost$-$allocation bases, or different degrees of difficulty in determining$$ cause$-$and$-$effect $($or$$ benefits$-$received$)$ relationships.

C$.$

describes an$$ event, task, or unit of work with a specified purpose. Consistent with its more strategic$$ focus, costing system refinement identifies activities in all functions of the value chain. Costing system refinement first calculates the costs of individual activities and then assigns costs to cost objects such as products and services on the basis of the mix of activities needed to produce each product or service.

D$.$

describes a costing approach that uses broad averages for assigning the cost of resources uniformly to cost objects when the individual products or$$ services, in$$ fact, use those