Activity Based Costing - Essay Example

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Activity Based Costing

More than that, it traces back the cost to the activities and processes (Heisinger, 2010). Above all, use of activity based costing (ABC) method especially in companies with diverse centers and distribution channels has proven to be suitable. Unlike other methods, the activity based costing (ABC) method ensures that there exists a direct correlation between the related overhead costs and the occurrence of an activity (Chang, 2010). Without doubt, the marketing manager decision to use the activity based costing (ABC) method, as a way of critically analyzing the customer support and distribution costs is more suitable, as compared to taking the store with the highest contribution margin ratio. ...Show more

Summary

Based on the activity based costing (ABC) method, the company should increase the number of department stores, as part of its expansion strategy (Chakraborty, 2004)…
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