Activity Structured Costing System Essay

Activity based costing system

Activity centered costing system is the priced at system that it may based on the occurred of events to assign to the products and services that involved in the process of providing the item or service. So first of all, it will determine various actions performed in a firm and then, allocated the overhead costs to activities applying multiple expense drives and allocate the overhead costs to products and services based on the amount of this consumed of such activities and resources. Intended for ABC system used of multiple travel however , traditional costing system only based on one expense driver. ABC system capable to take accounts of all the overhead costs such as selling and administrative, marketing and general expenses. The conventional costing systems focus on interior organisation management and are financially-oriented So the companies that operate under modern day settings might not exactly favourable to work with of traditional costing systems due to increasing global competition, advance technical and advancement new management such as total quality managing, just with time and flexible production system. Yet , ABC may work with different system including economic value added, total quality management or theory of constraints. Additionally , ABC program may able to monitoring the hidden loss and revenue compare with the traditional costing program. But for identical output it might not reasonable to implement in ABC program but reasonable to traditional costing system. Advantage of HURUF is permitting to better management of the methods due to its focus on support strategic decision and ensure the supervision is effective use of resources. In addition , it capable help managing to measure product and service costs accuracy than traditional being system Despite the fact that, ABC system have multiple cost drives but it does not require additional information than classic costing system due to this will depend on number of measurements. In addition , the overhead costs can every...

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