Activity-Based Costing (ABC)

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Explain how work the Activity-Based Costing (ABC), what is the challenge and how we can resolve it?

 

 

 

Sample Solution

Activity-Based Costing (ABC)

Activity-based costing (ABC) is a method of assigning overhead and indirect costs, such as salaries and utilities, to products and services. The ABC system of cost accounting is based on activities, which are considered any event, unit of work, or task with a specific goal (The Chartered Institute of Management Accountants, 2005:3). ABC is mostly used in the manufacturing industry since it enhances the reliability of cost data, hence producing nearly true costs and better classifying the costs incurred by the company during its production process. However, companies that have attempted to implement ABC have encountered various difficulties: the lack of basic knowledge and skill of ABC techniques by employees; the fact that ABC is complex and require too many detailed records; and the fact that ABC is too time-consuming for the personnel.

neral administration theory in the modern-day management accounts for most of human action as action can be classified into creative and habitual action. Administrative action could be usefully viewed as a subclass of habitual action (Robbins and Coulter, 2007). Administrative thoughts are taken as activity that is viewed for perception of the kind of action. Thus, administration clearly puts the salient uniqueness of human action to ensure the general orders, routines of filing clerk, rules of school superintendent, discipline of political boss and other human activities possess the action characteristics in addition to administrative.

Purpose

Managing has become the most crucial human activity since human beings commenced formation of social organizations to fulfill objectives and aims which they could not achieve as individuals. Managing as been important to guarantee the coordination of individual labors. Society has been relying on grouping effort and since most of the organizations have grown enough, the managers’ duty has ever increased in complexity and importance. Henceforth, the general management theory has turned into an important manner in which the managers manage the intricate organizations (Homans G.C, 1958).

Content

Most of the managers in various parts of the world may have gained managerial skills with

devoid of basic theoretical knowledge for management (Robbins and Coulter, 2007). However, it has been confirmed that the managers with general administration theory in their daily duties, manage their organizations better in a more effectively and efficiently way to attain both organization and individual objectives. Thus, managers of modern organizations ought to value the important function they play in their particular organizations they must achieve the organizations set goals. Secondly, there is the necessity of promoting superiority among all the personnel in organizations, mainly among the managers themselves (Fleet D. and Pet

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