Management Accounting- ABC

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What is ABC?
ABC is an alternative absorption costing system that does not use volume in tracing costs to cost objects
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Volume based costing
shifts costs from high volume to low volume products making the latter look more expensive than if costing had been based on resources they actually consumed
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What kind of companies is ABC more useful for?
diversified multi-product companies
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What is the focus of ABC?
ABC focuses on activities and how these activities are absorbed by the cost objects. e.g products
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Why does ABC produce more accurate product cost?
Because it focuses on activities and cost drivers
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Other cards in this set

Card 2

Front

Volume based costing

Back

shifts costs from high volume to low volume products making the latter look more expensive than if costing had been based on resources they actually consumed

Card 3

Front

What kind of companies is ABC more useful for?

Back

Preview of the front of card 3

Card 4

Front

What is the focus of ABC?

Back

Preview of the front of card 4

Card 5

Front

Why does ABC produce more accurate product cost?

Back

Preview of the front of card 5

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