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Activity based costing is a recent approach to product costing. It is an attempt to reflect more accurately in product costs those activities, which influence the level of support overheads.
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Activity based costing is a recent approach to product costing. It is an attempt to reflect more accurately in product costs those activities, which influence the level of support overheads. ( T Lucey,1993 ) Required : Critically evaluate the above statement. Activity Based Costing. (ABC) ABC is some sorts of classification overheads that difference from traditional classification. Abc actually calculates based on activity of production but traditional classification was calculating based on volume of production. Went a traditional classification is used, the variable costs are different from production volume but there is no tangent in fixed cost with production volume therefore most of the overheads most of the overheads are with the cost. ABC recognizes that in the long run mosts cost are not fixed and found the cause overhead costs change's overtime. Abc will assume that activities cause costs and also that product create demands for activities. Abc made a connection with activity...
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