Activity-Based-Costing

Seminar paper from the year 2004 in the subject Business economics - Controlling, grade: 1,5, University of Wales, Newport,, course: Management Accounting, language: English, abstract: The initial aim of this report is to layout the main differences of the client¿s current basis of overhead absorption, compared to activity - based costing (ABC). By showing the divergence of both systems, it appears that information generated from traditional overhead absorption does not properly equip management with suitable information for decision making. An additional aim of this paper focuses on the potential benefits of activity - based costing. It illustrates the chances of ABC as a decision making tool to provide management benefits regarding the accuracy of cost and the achievement of goals and strategies. Lastly, this report highlights all information required for the implementation of ABC into the organisation. It also reveals the necessity to collect and process the information needed in the correct format at a reasonable cost.