{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

BUAD 250b Case 1 problem 4c

BUAD 250b Case 1 problem 4c - The overriding issue with...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
The overriding issue with Activity-Based Costing is, while it provides a more accurate picture for internal decision making, it is not required by GAAP ( Generally Accepted Accounting Principles ) and therefore an extra cost. There are many benefits to an Activity- Based Costing system, including but not limited to, a more accurate description of where costs originate from, better placement of overhead costs, the ability to determine if one product/service is more profitable than another and the ability to determine if one product/service is operating at a loss and should either be restructured or replaced. As we see in our case, Traditional Costing presents one picture while Activity-Based Costing paints a different picture with great room for improvement. Technically, the main difference between Traditional Costing and Activity-Based Costing ( ABC ) is ABC uses different cost drivers for each overhead cost rather than assuming all costs operate at the same ratio as the predetermined cost driver.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}