Criticisms Of Absorption Cost Systems: Inaccurate Product Costs
- Topics:
- Strategic Management Tools
- Source:
- McGraw-Hill Companies
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Overview: Activity Based Costing (ABC) method computes the overall product cost taking into account the cost involved in the intermediate activities leading to delivery of the final product. ABC refines costing systems by focusing on individual activities as the fundamental cost object. It assigns costs to cost objects based on the activities undertaken to produce each product or service. This entails classifying the costs into one of four categories. These categories are unit level, batch level, product level, and product sustaining. The paper compares ABC to traditional absorption costing.
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Format: HTML | Size: 73KB | Date: Jan 2003 | Pages: 19
