Management Accounting

Traditional rule & action mechanism establish follow Yes, Managers, consultants and academics principally accept superiority of activity based be over traditional systems. While many alphabet supremacy stories give way been recognized, a large number of implementations deceive to produce overt benefits. This essay will go finished true facts of an ABC implementation over the traditional method, with rate to the pros and cons. The traditional method of cost accounting refers to the allocation of manufacturing overheads cost to the products manufactured, this method assigns or allocates the factorys in lineal costs to the items manufactured on the basis of volume such(prenominal) as the number if units produced, the direct labor hours or the toil machine hours. Traditionally that whitethorn have been sufficient for the fraternitys external fiscal didacticss. However, in the last two decades the manufacturing overheads has been driven or caused by many other factors. For example, just about customers are likely to exact additional manufacturing operations for their assorted products. Other customers simply urgency many quantities of uniform products. Alternatively, (Garrison, R., 2010) Activity based be is a costing method that is designed to provide managers with cost training for strategic and other decisions that potentially affect capacity and hence Fixed as sound as variable costs. In terms if strategic decisions, organizations whitethorn drop unprofitable products, bid prices on other, and in well-nigh cases even discounted relationships with clientele. Therefore (Kaplan, 2006) argues that if manufacturers inadequacy to know the true cost to produce specific products for certain customers, than they must recognize the shortcomings that come with the implementation of the traditional costing method. Thus, Kaplan encourages companies to implement the Activity Based Costing. The reason behind this statement is that, while standard costing system is easil! y to empathise and...If you want to get a full essay, order it on our website: OrderEssay.net

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