Post a composite review
Unpost a composite review
Search all MERLOT
Select to go to your profile
Select to go to your workspace
Select to go to your Dashboard Report
Select to go to your Content Builder
Select to log out
Search Terms
Enter username
Enter password
Please give at least one keyword of at least three characters for the search to work with. The more keywords you give, the better the search will work for you.
Select OK to launch help window
Cancel help


Advanced Search


Peer Review

Activity Based Costing

by James Martin


Overall Numeric Rating:

3.5 stars
Content Quality: 3.75 stars
Effectiveness: 3.5 stars
Ease of Use: 3.5 stars
Reviewed: Dec 30, 2011 by Business Editorial Board
Overview: This material detail links to Chapter 7 from 14 textbook chapters on management accounting concepts. Chapter 7 is devoted to the basic understanding and application of activity based costing and the comparison of ABC with the traditional volume based costing method. The material includes problems (with a separate link to the solutions), exhibits, multiple choice questions, and a bibliography of related journal articles and other outside materials.
Type of Material: Textbook chapter.
Recommended Uses: Homework assignment outside of class. Can be completed as an individual or group assignment. Can be used to supplement and/or replace classroom lecture.
Technical Requirements: No special software or hardware requirements.
Identify Major Learning Goals: The goals of this chapter are to:
  • Understand of the concept of activity based costing
  • Apply activity based costing
  • Compare traditional volume based costing methods with activity based costing
  • Target Student Population: Cost Accounting Course at the undergraduate or graduate level.
    Prerequisite Knowledge or Skills: None

    Evaluation and Observation

    Content Quality

    Rating: 3.75 stars
  • This chapter explains the concept of ABC and how to apply ABC in the manufacturing environment.
  • The logical progression includes an introduction of the concept to its application.
  • The content contains a chapter demonstration problem with multiple choice questions (and solutions).
  • Clarify and conciseness are average. Integration of concepts is fair.
  • The learning module is self-contained, however, and includes end of chapter questions and problems. The questions have a link to additional questions and sources of information.
  • Concerns: Formulas used contain variables that are not commonly used in accounting textbooks so it may be more difficult for students to understand at first.


      Ci = Di + G(Rj)(Aji)
      Ci = Total annual cost of product i.
      Di = Direct cost of product i.
      Aji = Quantity of activity j consumed by product i.
      Rj = the activity overhead rate for activity j.
      j = the number of the activity.
      i = the number of the product.
      G = Greek sigma or summation sign meaning "the sum of".

    Potential Effectiveness as a Teaching Tool

    Rating: 3.5 stars
  • The chapter identifies learning objectives and demonstrates relationships between concepts.
  • Several problems at the end of the chapter to reinforce the concepts. These problems contain multiple choice questions.
  • The additional questions provide links to the in-chapter reading materials and exhibits where the answers can be found. It also provides links to outside sources that can provide additional understanding.
  • Concerns: Chapter exhibits are very detailed and contain substantial information and numbers. The exhibits must be studied carefully in order to understand the concepts demonstrated. They might be easier to understand if they were subdivided.
  • This chapter has 15 learning objectives. Several should be combined to reduce the total independent objectives. For a few of them, only one or two paragraphs address the concept. Take leaning objective 11, for example. It discusses CAM-I's involvement in developing and implementing ABC concepts and techniques. Chapter coverage consists of the following:
      WHAT IS CAM-I? CAM-I is an acronym that stands for Consortium for Advanced Manufacturing - International. The consortium (pronounced, kan-sor-she-am) is made up of industrial organizations, government agencies, universities and professional accounting firms, formed in 1972 to work together in a variety of research programs. Although most of CAM-I's research programs are related to engineering and production, one program referred to as cost management systems (CMS) is related to accounting and more specifically to the material presented in this chapter.

  • Ease of Use for Both Students and Faculty

    Rating: 3.5 stars
    Strengths: The material can all be accessed from the main page. All users have to do is scroll up or down. Links also exist to allow users to jump to a specific topic or area of the chapter. No specific explanation on navigating through the material is provided, however, it is obvious how to get from one section to the next.
    Concerns: This module will not grab the interest of the student. The chapter is almost entirely text based which requires extensive reading, something students avoid even with the fanciest of textbooks that include color and graphics. The exhibits are very detailed and contain a lot of numerical data. The formulas in the chapter do not use symbols that are common place in other textbooks. The only interaction consists of links to the footnotes (which they probably do not read) and links to the chapter exhibits in the additional questions.

    Creative Commons:
    Creative Commons License
    This work is licensed under a Attribution-NonCommercial-NoDerivs 3.0 United States