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Essay / Research Paper Abstract
This 9 page paper consider how activity based accounting methods can support strategic management. The use of this type of accounting system is explored using the artefact method and a real life example. The bibliography cites 7 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEartifabc.rtf
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Unformatted sample text from the term paper:
will depend on the input and the transformation processes, better quality at both of these stages will result in better quality information on which decision can be based. One system
that has aided decision making, is the activity based costing system. The process of activity based costing allows for a more modern and accurate way of costing the different
processes and products that are undertaken by a company. To look at this we first need to consider how this will improve information and inputs to help strategy development. For
this we can look at a company such as the Cooper Pen Company and how they initially accounting for the costs of production and the problems this caused (Atkinson et
al, 2001). The traditional method of accounting for costs is known as absorption costing. This type of costing, also known as total
or full costing, has the objective of ensuring that each item produced, cost centre used and process all will bear a fair share of the incurred overheads of the business.
The main aim of using this method is to ensure that the actual overhead costs are recovered, which is why we see the common use of the phrase overhead recovery
as synonymous with the term overhead absorption (Chadwick, 1996). The first stage in absorption cost has to be the determination of the overheads in advance of the period
we are budgeting for. Therefore, we need to be looking at the next accounting period and not the current period. The basis of this method requires that the overheads are
determined by either calculation or estimation (Chadwick, 1996). The reason that this is necessary is that the way the costs will
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