Following type of companies
1) Those who want to perform better
2) Those who want to be competitive
False
Budgetary Control is projection of financial accounts and std. costing is a projection of cost accounts. Variances are shown in total in thhe former and a detailed analysis of variances is done in the latter. In std. costing, cost data ior each activity is pre-determined based on normal level of operaion.
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ABC is generally used in the manufacturing industry, but I suppose if you have distinct services that you are providing you could make it work. You'd have to be able to separate your costs between the different services that you offer. Perhaps setting up various cost centres, or activity codes for the employees to charge time to for each job that they are working on might work.
There are a great number of companies that are considered to be the top five. These companies vary based on who you talk to.
Any company providing a "dynamic" good, where the methods are changing could benefit from activity based costing. Goods and services which always have the same overhead cost do not need such a schematic.
The companies benefiting the most from ABC would be companies with a significant amount of overhead pertaining to a diversity of activities in providing goods (or services) to customers whose demands also vary.
Answering "Problem relating to the implementation of activity based costing and activity based management system
activity based costing does not promote TQM(total quality management) and continuous improvement but attribute based costing promotes the both.
False. Activity-based costing is used to allocate indirect cost into direct costs.Regardng direct cost, traditional costing is as appropriate as activity-based costing.
It is old costing technique & it is replaced by activity based costing
Activity based costing has primary difference of allocation of overheads which are based on activities performed by any department while in traditional costing system overheads are allocated on predetermined rate which may be not very accurate.
In traditional costing, overheads are allocated using blanket rate while in activity based costing overheads are allocated by the activities performed.
ABM strategically incorporates activity analysis, activity-based costing (ABC), activity-based budgeting, life cycle and target costing, process value analysis, and value-chain analysis.
yes
Activity-based costing is a form of cost refinement, designed to obtain greater accuracy than traditional allocations in cost assignments for product costing and decision-making purposes.
Activity based costing allocate the overhead expenses based on activities performed and that's why it is an accurate way to allocate overhead expenses while in absorption costing, overheads are allocated based on some ratios or predetermined rate which is not accurate method of allocation of cost.