HW2 part 2 ABC - systems such as ABC being developed....

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

View Full Document Right Arrow Icon
Lertsatchanant, Kanyarat Accounting 203 Homework Assignment 2 What did you learn about ABC costing from reading this article? Activity Based costing offers in sight into the cost of activities incurred by a firm and as such this system enables company’s to discontinue non value-adding activities. Better decisions on pricing products and in regards to product mix should also be possible through adopting ABC. A cost/ benefit analysis should be conducted before a particular firm adopts it. Firms decide to simply add more cost pools within their job costing system rather than adopt ABC. The benefits and costs of more advanced costing systems such as activity based costing need to be clearly understood before they are introduced by an organization. The complexity of current business environment led more detailed cost
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: systems such as ABC being developed. Non-manufacturing costs form a greater proportion of an entitys cost. More emphasis is placed today on accurately allocating to cost objects. ABC is preferred over job costing and process costing. In that the activity cost pools developed are more homogeneous and that activity cost drivers used to allocated these cost are better reflections of how these resources are used by cost objects. However, ABC can be expensive to introduce, and care should be paid to ensuring that the benefits obtained form its adoption outweigh implementation and monitoring costs. ABC lead to process improvement as it focuses on the activities used by a cost objects....
View Full Document

This note was uploaded on 02/10/2011 for the course ACCOUNTING 202 taught by Professor William during the Winter '08 term at Edmonds Community College.

Ask a homework question - tutors are online