Activity Based Costing
Analyse the evolution of ACTIVITY BASED COSTING (ABC).
What Factors led to its emergence.
Contents
Abstract………………………………………………………………………………………. 3
Introduction……………………………………………………………………………….. 4
Activity Based Costing (ABC)……………………………………………………..…. 5 * What is ABC * Development Of ABC
Terms Involved in ABC & Stages of ABC………………………………………… 6
Evolution Of ABC………………………………………………………………………… 7
Phases of development of ABC……………………………………………………… 8
What led to the emergence of ABC……………………………………………….. 10 * Traditional Costing V/S Activity Based Costing
Advantages of ABC……………………………………………………………………… 11
Activity Based Costing – A tool For decision Making……………………… 14
How is ABC better than Traditional Costing…………………………………. 15
How ABC showed changes in firms Finance…………………………………. 17 * Example
Limitation of ABC……………………………………………………………………… 24
Conclusion……………………………………………………………………………….. 25
References……………………………………………………………………………….. 26
ABSTRACT
In today’s advanced manufacturing and competitive environment, accurate costing information is crucial for all the kinds of businesses, such as manufacturing firms, merchandizing firms, and service firms. Argued to be superior to the traditional volume-based costing system, Activity-Based Costing system (ABC) has increasingly attracted the attention of practitioners and researchers alike as one of the strategic tools to aid managers for better decision making. The benefits of ABC system and its impacts on companies’ performance have motivated numerous empirical studies on ABC system and it is considered as one of the most-researched management accounting areas in developed countries. Previous research on ABC have examined pertinent issues related to ABC implementation such as the levels of ABC adoption in various countries, the reasons for implementing ABC, the problems related to ABC and the critical success factors influencing ABC.
Activity Based Costing (ABC) is a method for developing cost estimates in
What Factors led to its emergence.
Contents
Abstract………………………………………………………………………………………. 3
Introduction……………………………………………………………………………….. 4
Activity Based Costing (ABC)……………………………………………………..…. 5 * What is ABC * Development Of ABC
Terms Involved in ABC & Stages of ABC………………………………………… 6
Evolution Of ABC………………………………………………………………………… 7
Phases of development of ABC……………………………………………………… 8
What led to the emergence of ABC……………………………………………….. 10 * Traditional Costing V/S Activity Based Costing
Advantages of ABC……………………………………………………………………… 11
Activity Based Costing – A tool For decision Making……………………… 14
How is ABC better than Traditional Costing…………………………………. 15
How ABC showed changes in firms Finance…………………………………. 17 * Example
Limitation of ABC……………………………………………………………………… 24
Conclusion……………………………………………………………………………….. 25
References……………………………………………………………………………….. 26
ABSTRACT
In today’s advanced manufacturing and competitive environment, accurate costing information is crucial for all the kinds of businesses, such as manufacturing firms, merchandizing firms, and service firms. Argued to be superior to the traditional volume-based costing system, Activity-Based Costing system (ABC) has increasingly attracted the attention of practitioners and researchers alike as one of the strategic tools to aid managers for better decision making. The benefits of ABC system and its impacts on companies’ performance have motivated numerous empirical studies on ABC system and it is considered as one of the most-researched management accounting areas in developed countries. Previous research on ABC have examined pertinent issues related to ABC implementation such as the levels of ABC adoption in various countries, the reasons for implementing ABC, the problems related to ABC and the critical success factors influencing ABC.
Activity Based Costing (ABC) is a method for developing cost estimates in
References: Ittner, C, Lanen, W & Larcker, 2002, 'The Association Between Activity-Based Costing and Manufacturing Performance ehow.com