Management Accounting

Traditional rule & act ground be Yes, Managers, consultants and academics principally accept superiority of activity based be over traditional systems. While many alphabet triumph stories give way been recognized, a large number of implementations dampen to produce overt benefits. This essay will go through with(predicate) true facts of an ABC implementation over the traditional method, with consider to the pros and cons. The traditional method of embody accounting refers to the allocation of manufacturing overheads be to the products manufactured, this method assigns or allocates the factorys in lineal costs to the items manufactured on the basis of volume much(prenominal) as the number if units produced, the direct labor hours or the outturn machine hours. Traditionally that whitethorn have been sufficient for the orders external fiscal didacticss. However, in the last deuce decades the manufacturing overheads has been driven or caused by many other factors. For example, few customers are likely to exact additional manufacturing operations for their various 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 closely as variable costs. In terms if strategic decisions, organizations whitethorn drop unprofitable products, bid prices on other, and in few cases even discounted relationships with clientele. Therefore (Kaplan, 2006) argues that if manufacturers inadequacy to know the true cost to produce specific products for certa! in customers, than they must recognize the shortcomings that commence 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 easily to empathise and...If you want to get a full essay, order it on our website: OrderEssay.net

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