Question

“Activity-based costing is just another inventory valuation method. It isn’t relevant for making operating decisions.” Do you agree with this statement? Explain

Answer 1

solution :

No, we are not concur with the given explanation. It isn't right. Movement based costing(ABC) is a stock valuation strategy however more than that it is an advanced costing procedures for settling on working choices.

ABC is a costing framework which centers around exercises performed to deliver items. ABC is a costing in which costs are first followed to exercises and after that to items. This costing framework accept that exercises are in charge of the occurence of expenses and makes interest for exercises. Expenses are charged to items dependent on individual item's utilization of every movement giving the administration the exact information to settle on any sort of choice identified with an item not at all like in customary costing approach. It very well may be use in the accompanying regions:

Estimating

Settle on or Buy choices

Exchange Pricing

Plant shut down choices

Capital Investment choice

Product offering benefit