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Relevance Lost: The Rise and Fall of Traditional Costing
Finance & Accounting
Pages 10 (2510 words)
Relevance Lost: The Rise and Fall of Traditional Costing Name Course University Instructor’s Name Date of Submission Word Count: 1996 Words Abstract The traditional costing system had been a very common cost accounting system used during the 19th century.
The basic aim of this entire report is to discuss the rise and fall of the traditional costing system with a focus on the reason as to why the traditional costing system provided a vague picture of the product cost. The report also addresses all the issues and the comments passed upon by the senior management officials of JM Ltd while they were being interviewed. Finally the report elaborates the use and advantage of Activity Based Costing and provides an insight as to the suitability and usage of Activity Based Costing system for manufacturing organizations as compared to the traditional costing system. Introduction Costing is defined as “The establishment of budgets, standard costs and actual costs of operations, processes, activities or products; and the analysis of variances, profitability, or the social use of funds” (Lucey, 1996). With an end to the barter system, money became an important consideration. The introduction of money as a medium to purchase and sell any product or service led to issue of costs. ...
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