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The Activity Based Costing System
Finance & Accounting
Pages 10 (2510 words)
Costing systems are types of information systems which require a particular type of information like the number of units produced and the number of direct labour hours of value that are involved in the process…
ta for input may be used differently according to different methodologies of the costing information system which may result in the production of varying outputs of information. A costing system is aimed at generating information to find ways to minimize waste in production. It should be taken care of that the benefits that are derived from the costing system should be higher than the resources used in designing, implementing and maintaining the costing system so that wastage is minimized. It is important to understand the fundamental working of the two systems i.e. The Traditional Costing System and the Activity Based Costing System in order make a comparison between the two. The traditional costing system The traditional costing systems use a single cost driver which is based on volume. Due to this reason, the traditional costing systems tend to distort the cost of the products. ...
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