Unformatted text preview: away fro m it. 4. Informat ion fro m the ABC system can also help Tracy manage its business better in several ways. a. Product design. Product designers at Tracy Corporation likely will find the numbers in the act ivit ybased cost ing approach more believable and credible than those in the simple system. In a machinepaced manufacturing environment, it is unlikely that direct laborhours would be the major cost driver. Activit ybased costing provides more credible signals to product designers about the ways the costs of a product can be reduced––for example, use fewer parts, require fewer turns on the lathe, and reduce the number of machinehours in the milling area. b. Cost management. Tracy can reduce the cost of jo bs both by making process improvements that reduce the activit ies that need to be done to complete jobs and by reducing the costs of doing the act ivit ies. c. Cost planning. ABC provides a more refined mo del to forecast costs and to explain why actual costs differ fro m budgeted costs. 5-45 53...
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This note was uploaded on 10/11/2010 for the course ACCT 321 taught by Professor Cole during the Spring '10 term at University of Miami.
- Spring '10
- Cost Accounting