activity based costing - page 1
Keywords: ABC
By finil on 15/05/2009
Level: Master's degree (MA, MBA, MSc, MEng, MRes, MPhil etc)
Page Number: 1 of 8 pages: 1 2 3 4 5 6 7 8
GENERAL
In this case study, describing about the ABC (Activity Based Costing) and how it might help the exiting and new company. It includes how the Activity Based Approach extended to Activity Based Budgeting (ABB) and Activity Based Management (ABM).At the first part of the case study, concerns of the Managing Director of Bird Garden Products about the ABC approach against traditional costing approach. At the mid part covers all the aspects of ABC, ABB and ABM and how the ABC helps the company. At the last section finishing with two discussion about the development and limitation of ABC.
ACTIVITY BASED COSTING
INTRODUCTION
Activity Based Costing (ABC) is costing system that used to identifying different activities in a business and allocates the cost for each activity in order to produce the actual cost of products and services for removing losses and high price. It is the common method for analysing product, profitability and customer cost. It has been using to take accurate decision for the managers and improve policing services. The traditional cost management system can not be useful correct costs estimation and decision making processes, the managers are unable to find out the accurate decision. Even though, it is not covering all the aspects of cost estimates.
Activity Based Costing system makes the employees to identifying the various cost concerned. It will make them to identifying the cost, and different activities that make add benefits and those do not add benefits. Through this development and values can be identified.
Activity Based Costing (ABC) identified as internal operating concerns against traditional Ledger costing management, but it is not a replacement over traditional accounting. It is make to provide origin record from standard job costing system. Because of heavily labour based, ABC focusing to business units event such as Cost Drivers and cost pools against time-phrase sequence. The ABC system concave to serve performing entities and management.
REVIEW
Attributing cost, is an assumed that a firm separate the result process as events that drive cost. The events are divided into either First or Second stage event cost drivers. In the First of event measured by the consumption of resources. Each recourse atypically will have the cost per unit. These events are identified by what resource consume.
The second stage event cost driver is analysed by out-put event. Each of items with a event process will a per unit cost,it includes the use of recourse and results that produced by
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