Introduction
Activity Based Costing ( alphabet) is a method of allocating cost to products and services. It is generally used as a tool for planning and control. It was generated by Robin Cooper and Robert Kaplan as an approach to find out problems associated with traditional cost attention systems that tend to be inadequate to determine actual mathematical product and service costs, or provide useful information for in operation(p) decisions. With these deficiencies, managers have to make decisions based on inaccurate data. ABC is a more accurate method to attribute costs to activities than traditional cost accounting methods.
Benefits of ABC
ABC traces rather than allocates individually expense category to the particular cost object. It makes in film expenses direct. 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 atomic number 18 diverse in terms of amount of direct labour, gaudiness and complexity. Fourthly, they use ABC when costs of errors are high.
Fifthly, ABC stack be beneficial when complex products bring 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 channels as well as the least profitable ones. It track costs of activities and work processes. ABC spots the main causes of poor monetary performance. It equips managers with cost intelligence to stimulate improvements. ABC helps companies to enhance the dicker power with the customer. It achieves better positioning of products, facilitates a better market mix. It accurately predicts costs, profits and resources requirements associated with changes in production volumes,...If you want to piss a full essay, order it on our website: Orderessay
If you want to get a full essay, wisit our page: write my essay .
No comments:
Post a Comment