Re: Recommendations on Activity Based Costing (ABC)
– Activity based costing should be adopted as the cost-accounting method for the company.
The suggestion to use Activity Based Costing is based on this accounting method taking into account the cost of producing items based on the activities required to make them instead of basic metrics such as labor requirement. According to The Difference Between (2012), Activity-based Costing identifies the respective activities in the production process and assigns each of them with their respective costs, depending on the consumption levels. Unlike conventional costing, activity based costing allocates overheads into ‘direct’ costs.
The adoption of activity based