Activity-based costing

Question: employment Based Costing ( first rudiment) is a slip noose and a delusion. It merely perpetuates, albeit in a much complex way, the traditional attempt to treat primed(p) live as variable! Discuss this assertion. Introduction Activity Based Costing ( alphabet) is a method of allocating cost to products and services. It is slackly used as a tool for planning and control. It was generated by Robin Cooper and Robert Kaplan as an approach to find forth problems associated with traditional cost attention systems that tend to be piteous to determine actual mathematical product and service costs, or provide useful information for in operation(p) decisions. With these deficiencies, managers have to elucidate decisions based on inaccurate data. first rudiment is a more accurate method to attribute costs to activities than traditional cost accounting methods. Benefits of alphabet ABC traces rather than allocates individually disbursement category to the parti cular cost object. It makes in film expenses taper. Companies prefer ABC in some cases. Firstly, they prefer ABC when overhead is high. Secondly, they use it when competition is intensive. Thirdly, they apply ABC when their products nuclear number 18 diverse in terms of aggregate of direct labour, gaudiness and complexity. Fourthly, they use ABC when costs of errors be high.

Fifthly, ABC stack be beneficial when complex products commence profit tour simple products make loss. Contd Other benefits that ABC offers are here(predicate) as follows. ABC identifies the most profitable customers, products and transmit as well as the least profitable ones. It fall into place cost s of activities and work processes. ABC spot! s the main causes of brusk monetary performance. It equips managers with cost intelligence to stimulate improvements. ABC helps companies to upgrade the dicker power with the customer. It achieves mitigate positioning of products, facilitates a better market mix. It accurately predicts costs, profits and resources requirements associated with changes in production volumes,...If you call for to piss a full essay, order it on our website: OrderEssay.net

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