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Essay / Research Paper Abstract
This 4 page paper looks at the benefits that Activity based costing can bring to a firm. The concept and process of activity based accounting and the benefits it can create as well as some of the potential difficulties of using this system. The bibliography cites 5 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEABCbenif.rtf
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Unformatted sample text from the term paper:
more transparent view of the cost that a firm incurs in its operations, The idea is that this is a system, that can be used for any product or service
where there are two processes or more and will give a clear picture of the actual cost of production or providing that good or service. The traditional approach uses absorption
costing where there is an appropriate of overheads to departments, which may or may not be representative of the actual use of the resources and it may serve to confuse
or obscure the real costs and profitability with inaccurate allocation which may end up with over allocations if there is higher than expected production. In order to consider the
use and benefits of activity based costing (ABC) to a firm it is important to look at the process and consider what it can and cannot do, how this is
achieved and the potential difficulties as well as advantages pf the system, in this case we will consider the case of any manufacturing firm of company that produces some type
of physical good1. For this model to work there needs to be a process of manufacture where there are at least
a sequence of at least two activities required for the production of the product or service (Nair, 2000). The example used can be anything from a car being manufactured to
plastic injection molding. The activity based systems looks at the activities in an ABC manner and then forms a useable and adaptable model from which the company can work (Pickar,
2000). The activities that the company undertakes are deconstructed in this model, in many ways we can argue that this is a tool utilized by scientific management techniques when it
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