Explain activity based costing versus traditional costing, Managerial Accounting

Assignment Help:

Activity based costing versus traditional costing

Following are the main differences between activity based costing system and traditional costing system:

Explain 

1) Under ABC system overhead costs are identified to each major activity in stead of the department as under traditional costing system. It results in greater number of cost centers under ABC system.

2) The term cost driver is not used under traditional costing system. Popular terms are basis of allocation or apportionment. Under ABC system cost delivers are fewer in number for the purpose of charging overheads to products.

3) ABC system uses separate rates for support centers and there is no reallocation to production centres as is the case under traditional costing system.

Thus traditional costing system reveals less accurate cost as compared to ABC system. This is primarily because cruise and effect relationship is considered under ABC system to identity support cost objects which is not the case under traditional costing system.

 


Related Discussions:- Explain activity based costing versus traditional costing

Determine the stages in activity based costing, Stages in activity based co...

Stages in activity based costing The different stages in activity based costing are listed below and are shown in figure below. 1) Identification of the activities that may

Case of variable quantity-discounts structures, The case of variable quanti...

The case of variable quantity discounts In practice, suppliers may offer different discounts for different quantities purchased. For illustration:    Segment        Quantity

Managerial accounting, Managerial Accounting Before going to Managerial...

Managerial Accounting Before going to Managerial Accounting let us discuss a bit about Financial Accounting. Financial accounting is concerned with reporting to the external pa

Definition of accounting, Definition of accounting Accounting is the pr...

Definition of accounting Accounting is the procedure of recognizing measuring and communicating economic information to allow informed judgments and decisions by the user’s inf

Multiple regression, MULTIPLE REGRESSION The least square regression eq...

MULTIPLE REGRESSION The least square regression equation discussed above was based on the assumption that total cost was determined by only one activity based variable. However

Constraints, Constraints 1) A constraint of the type ≤ (≥) can be conve...

Constraints 1) A constraint of the type ≤ (≥) can be converted to an equation by adding a slack variable to (subtracting a surplus variable form) the left side of the constrain

Define zero bases budgeting according to cima, Define Zero bases budgeting ...

Define Zero bases budgeting According to CIMA According to CIMA, ZBB is a method of budgeting whereby all activities are re evaluated each time a budget is set. Discrete l

Determine the zero bases budgeting according to leonard mere, Determine the...

Determine the Zero bases budgeting According to Leonard mere According to Leonard mere,  ZBB is a technique which complements and links the existing planning budgeting and revi

Acceptance and allocation of resources , Acceptance and Allocation of Resou...

Acceptance and Allocation of Resources Managers, subsequent a review and analysis of all decision packages, will establish the level of resources to be assigned to each decisi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd