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Essay / Research Paper Abstract
This 3 page paper argues that activity based costing (ABC) may have many perceived advantages, but these will often fail to be realised due to inherent problems within the system of ABC when compared to other costing models such as absorption costing. The bibliography cites 4 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEabcpro.rtf
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Unformatted sample text from the term paper:
aiding the decision making processes so that net profits could be maximized. However, we can also argue that there has been little delivery on the promises it appeared to make.
In order to understand this we need to look at what we mean by activity based cost accounting and how it actually works so that the potential is not always
realized. Like all business systems it is a way of analyzing information and can be used as a tool to make decisions. However,
the results will only be as good as the information put into he system and the decision makers abilities to interpret and digest the information before making the decision, such
as costing and price related decision (Pickar, 2000). There is also the awareness that any business should accept, that the same as any other ABC type programs the results will
also be subject to the contextual setting in which they are obtained and operated in, and in evaluating the system they are more likely to receive a positive evaluation where
there is the potential for substantial savings to be made (Anderson and Young, 1999). Therefore we already have an indication that the application may not be as successful as always
envisaged, however this is not a new concept in business. The example used can be anything from a car being manufactured to
plastic injection moulding. 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
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