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Unformatted text preview: ABC Costing Here are a few items for discussion relevant to this module: How does ABC costing differ from traditional allocation methods? ABC modifies traditional product costing by assigning costs to activities instead of cost pools. ABC also recognizes the existence of two types of variable costs, unit-level and batch-level. Under the traditional approach some of the batch-level variable costs may have been erroneously classified as fixed costs thereby distorting cost information. What can an organization learn from the process of applying ABC costing? Activity based costing (ABC) is an accounting technique that aims to clarify exactly how and where a company makes its profit. ABC assigns costs to all the resources needed to carry out a particular business activity. It also accounts for indirect (soft) operating costs. The result is a fuller financial picture than is usually produced with other accounting methods (for example,...
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- Spring '12