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Management accounting - Assignment Example

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Before I begin discussing this statement, I would like to make my stand known. I disagree with this statement and I welcome the opportunity to argue and defend my case; this disagreement will form the bedrock of my whole discussion. Based on research and my professional experience, modern developments like activity-based costing (ABC) have brought significant benefits and advantages to businesses and organizations everywhere regardless of the size (small, medium-sized and large). These developments have allowed businesses and organizations to implement more efficient systems that guarantee long-term growth provided the implementation process is done correctly and professionally (Cotton 2001, pg. 29). ABC, for example, is a recent modern development/innovation that has been rapidly adopted by organizations in many industries. Governments and NGOs have also been quick to adopt and implement ABC and to make it a core component of their management policies. This shows that there must be something beneficial about these modern developments and ABC in particular, their fanciness is inconsequential to their primary functions. It is important to note that the adoption of such developments/innovations is not done in a wholesale manner because they come with their own disadvantages that must be addressed (Lucas 2006, pg. 39). However, overall, such developments are more beneficial and therefore rightfully warrant adoption and adoption.
Let us go back to ABC. This is a technique employed in determining correct costs. It is used to assign resource costs (based on activities that are conducted) to cost objects like customers products, or services. The basis for the ABC approach to costing is that an organization’s products or services stem from activities. Activities consume resources which in turn incur costs. In ABC, the costs of resources are normally assigned to activities on the basis of ...Show more
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Summary

Commenting on the results, I would say that both methods (conventional absorption costing and activity based costing) are effective ways of preparing budgeted profit statements. Looking at the results, I would say that the answers I came up with are valid confirmations that…
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