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5 advantages of Activity Based Costing (ABC).

Activitybased 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.

Advantages of activity based costing:

  • ABC is flexible enough to trace cost to processes, customer’s areas of
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Revision question on activity based costing (ABC)

(A)     XX glass limited has been in operation for the past seven years and manufactures shower doors. Since its establishment, the company has used a traditional overhead absorption costing system. However, the managing director, Peter Kenny, is considering making a change.

Over the past few years, Peter has streamlined the production process and reduced … Read the rest

Activity Based Costing VS traditional costing.

Activity-based costing is a method of allocating overhead cost by allocating it basing on the activities which drive it rather than using an arbitrary allocation base as in the traditional costing.

The following are differences between activity-based costing (ABC) and the traditional system of assigning overhead to product

  • The traditional system uses a single rate while activity-based costing uses multiple
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