Activity Based Costing Vs Traditional Costing Case Study

Activity Based Costing Vs Traditional Costing Case Study

MANAGEMENT ACCOUNTING II EPGP BATCH 08 IIM – KOZHIKODE 2015–2017
Submitted By:– Aditiya Prasad EPGP–08–001
Faculty:– Prof. K.K.Ramesh
Table of contents Title Page Number
Activity Based Costing Vs Traditional Costing 03–05 References 06–06
Question 1: Compare activity based costing (ABC) with traditional costing. Is it an improvement? If so why? Explain with a case (numerical).
Answer: Comparison between Activity Based Costing (ABC) and Traditional Costing are as follows:–
SL Pointers ABC Traditional 01 Benefit Factor The Activity Based Costing is an accurate product costing. The Traditional Costing is inexpensive. There is a possibility for elimination of non value based activities at ABC. The Traditional ... Show more content on Helpwriting.net ...With Traditional Costing the focus is on managing the cost of Responsibility Center. The Activity based Costing focuses on managing the activity. With Traditional Costing the focus is on managing the cost of Functional Department. The Activity based Costing focuses for solution pertaining to cross Functional issue. –– 04 Pool Cost The Activity Based Costing reflects many cost pools in order to reflect different activities. The Traditional Costing reflects limited number of cost pools i.e. One. 05 To whom it Suits The Activity Based Costing suits companies having high overhead. The Traditional Costing suits to low over head companies. The Activity Based Costing suits capital intensive companies. The Traditional Costing suits labor intensive companies. The Activity Based Costing suits to companies having more diverse set of operating activities –– The Activity Based Costing suits companies having diverse products –– The Activity Based Costing suits companies having the variation in number of production run. –– 06 Assigning the Cost Firstly Activity Based Costing shall assign the cost to activity cost pool. Firstly Traditional Costing shall assign the overhead cost to

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