Activity Based Costing (ABC) is a managerial accounting system which determines the cost of activities without distortion and provides management with relevant and timely information. It does not represent just a new set of overhead allocation rules or techniques to value inventory. ABC represents a way to look at operating costs and provides methods to dissect the underlying activities, which cause costs to exist” (Dunn 1891). The problem here, which is to be solved, is “Does the activity based costing play a vital part in financial performance”. For this purpose we have to know about the relevance of activity based costing. Here an example is given to know the difference about the activity based costing and conventional costing. E.g. Assume that Product A and Product B are manufactured by the same company. Product A is a low volume item and new one, it requires particular activities such as additional testing, special engineering, and some machine setups because it is ordered in less quantities. Product B is a big volume product produced constantly and needs little concentration and does not require the particular actions. “If this business makes use of conventional costing, they assign or assign every expense to goods on the basis of the amount of machine hours. ...Show more
Accounting Dissertation Does the activity based costing play a vital part in financial performance? Introduction: Activity based costing is the assigning of expenses of the measures which is the actual causes of expenses. This costing is not the part of costs on the basis of machine hours as in the traditional method…
Thus the current and the non-current assets and liabilities of the company has been assessed so as to investigate on the valuation method thus adopted by the company. At time the valuation of the assets of the company gets inflated due to the method of valuation thus adopted by the company.
In recent years there has been a major increase in the international importance of this concept. This has come about with its adoption by the European Community in the Fourth Directive on company law and its implementation in all Community countries. However, this concept has never been defined in UK legislation, and a variety of meanings can be attributed to it.
Different accounting policies can provide different estimates of earnings therefore accounting profit is not only an arbitrary figure but also subjective in nature. Accounting income can also be misleading because of the fact that it can distort the figures like Earnings per share (EPS) due to its subjectivity.
Most developing countries concentrate on developing their banking system, who act as the transmitter between the savers and the ultimate consumers of this credit. The bank is considered as the legal means of providing lending and most attention is paid
‘Issuance of stock’ is simply when shares are given out to investing people in the stock exchange – a market for shares. These generate funds for an organization, for the time being, but have to be given a return on, to the
1). A good budget helps management communicate its goals to its personnel and control the direction of the company’s operations. The budget is also important for the management and the employees because it provides a
existence of accounting records is to minimize or reduce the effect of principal-agent problem; its impact is reduced by measuring and close monitoring of the performance and reporting the results to parties concerned.
Financial accounting is a discipline which has evolved over
12 pages (3000 words)Essay
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