Question
In: Accounting
Explain the purpose of Activity-Based Costing(ABC).
Explain the purpose of Activity-Based
Costing(ABC).
Solutions
Expert Solution
Answer: It is a method of costing which identifies activities
and assigns indirect cost products.
It describes the necessary steps to determine the indirect costs
associated with ABC and the
calculations necessary to allocate these costs to activities and
products.
Finally it discusses the advantages and disadvantages of ABC and
how
it can be used as a decision tool for management.
It goes on to show how direct costs and indirect costs are fit together to form a total cost for each division, product or client in an organization.
And on the other hand, ABC has two purposes, first to prevent
cost distortion which happens in traditional accounting methods
because all indirect costs are placed in a single cost
pool, usually based on the direct labor of each activity. This cost
distortion is prevented in ABC
by developing numerous cost pools.
The other purpose is diminishing wasteful actions by providing
several cost drivers.
ekkarill92 answered 8 months agoRelated Solutions
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No plagiarised answer, please.
What is the difference between Activity-Based Costing(ABC) and Traditional Costing?
What is the difference between Activity-Based Costing(ABC) and
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. Explain how work the Activity-Based Costing (ABC), what is the
challenge and how we can resolve
it?
Select a manufacturer in your area and explain how it could implement an activity-based costing (ABC)...
Select a manufacturer in your area and explain how it could
implement an activity-based costing (ABC) system. When you are
deciding on a company to use, consider the costs and benefits in
implementing an ABC system. In your post, provide some background
information about your company. Explain what it produces and
identify the activities that would drive costs. Discuss the cost
pools that it would use. Recommend the process it would need to go
through to implement ABC in the...
How would you use activity-based costing (ABC) in the organization you work/worked at? Explain activity level...
How would you use activity-based costing (ABC) in the
organization you work/worked at? Explain activity level in your
organization in addition to the steps needed to follow while
implementing ABC.
Subject: Managerial Accounting
Write more than 350 words
How would you use activity-based costing (ABC) in the organization you work/worked at? Explain activity level...
How would you use activity-based costing (ABC) in the
organization you work/worked at? Explain activity level in your
organization in addition to the steps needed to follow while
implementing ABC.
Subject: Managerial Accounting
Write more than 350 words
Q1. Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns...
Q1. Activity-based costing (ABC) is a costing methodology that
identifies activities in an organization and assigns the cost of
each activity with resources to all products and services according
to the actual consumption by each. Do you think Activity-Based
Costing (ABC) has any advantages if so discuss few advantages and
also the challenges of this system and how we can resolve
it?
Q1. Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns...
Q1. Activity-based costing (ABC) is a costing methodology that
identifies activities in an organization and assigns the cost of
each activity with resources to all products and services according
to the actual consumption by each. Do you think Activity-Based
Costing (ABC) has any advantages if so discuss few advantages and
also the challenges of this system and how we can resolve
it?
[2 Marks ]
Q2. ALHAMAD Corporation uses process costing. A number of
transactions that occurred in December...
Describe the differences between job order costing, process costing, and Activity Based Costing (ABC). What are...
Describe the differences between job order costing, process
costing, and Activity Based Costing (ABC). What are the advantages
and disadvantages of each system? Imagine a company that you might
be a manager for. Describe that company and what their major
product or service would be. Then, tell which cost system would be
best suited to that firm and why.
Discuss the advantages and disadvantages of activity-based costing [ABC] as compared to more traditional costing methods....
Discuss the advantages and disadvantages of activity-based
costing [ABC] as compared to more traditional costing methods.
Include your opinion as to whether or not the cost-benefit
trade-off of ABC supports the use of it or not.
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