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Finance and Accounting Essay: Advanced Managment Accounting
Finance & Accounting
Pages 10 (2510 words)
Section 1: Introduction This report is based on the article ‘Activity-Based Costing: Is It Still Relevant?’ written by Startton, Desroches, Lawson and Hatch. The article addresses one of the most important questions whether the activity based costing should be used in organisations or not and whether the use of this costing technique is applicable even today or not.
However the main question for accountant and financial analysts in organisations around the world is which technique should be used for this purpose (Krumwiede, 1998). Activity costing method has been used widely across the world (Brimson, 1991) however there are several other costing methods being used by the organisations around the world like actual costing, normal costing and standard costing methods (Liu, & Pan, 2007). Activity costing method is a different type of costing method in which different activities of the organisation are identified and cost is assigned on each activity on the basis of actual consumption of each activity (Gupta, & Galloway, 2003). In this costing method, both indirect costs and direct costs are considered thus helping the analysts to calculate total costs rather than direct costs of the organisation (Askarany, Yazdifar, & Askary, 2010). This article is based on the research conducted about the relevance of activity based costing method and its benefits. However the article overlooks some of the important disadvantages of this costing system. In their research, employees at all levels were considered as respondents. Respondents of this research included executives, senior managers, directors, analysts, managers and other designations. ...
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