Introduction to Activity Based Costing

exist Accounting CA 2011 Topic: application base Costing Submission Date:16 march 2011 Word weigh:1770 Name:Mary Moss Student No:L00084540 Class: touch Yr 2 Contents Page 2 ……………………………………..Introduction to Activity establish Costing Page 2……………………………………..Benefits of alphabet Page 3……………………………………..Traditional Cost Accounting (TCA) Page 4……………………………………..Difference between alphabet and TCA Page 5……………………………………..Numerical example using rudiment and TCA Page 8……………………………………..Bibliography Introduction to Activity Based Costing Activity Based Costing (ABC) emerged in the 1980s from the rising escape of relevance of traditional woo accounting modes. It took just a short time for ABC to be accepted as an original and potentially valuable costing methodology, yet it took a further 20 years to reach its beneficial potential. ABC surfaced in response to competitive demands that exposed errors in cost accounting. Early uses helped companies see the deformities in cost accounting outlines jumper lead to changes in policy, processes, operations and improved competitive position.

The ABC method originates from a simple principle, this being, activities consume resources and customers consume activities. It is a method of allocating costs to products and services and is commonly used as a fauna for planning and control. It was developed as an approach to undertake problems that were related with traditional cost management systems, as this system inclines to have the lack of ability to precisely determine factual production and service costs, or supply useful selective information for operating decisions. With these deficiencies managers can be exposed to making choices base on imprecise data. ABC permits managers to assign costs to activities and products more(prenominal) precisely than traditional cost accounting methods allowed for Benefits of ABC This powerful tool is now being used by companies across many a(prenominal) industries and within government and non profit... If you want to get a full essay, order it on our website: Ordercustompaper.com

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