Activity Based Costing As a One Step Attribution System Compared To Other Traditional Systems
As managers, we always try to relate the overheads costs by APPORTIONING to the various cost centres.
Remember that activity based costing is basically a ” one-step attribution system” as costs are NOT APPORTIONED between activities-the costs of each activity are RELATED DIRECTLY to products. Cost attribution is the process of relating cost to cost centres or cost units using cost allocation or cost apportion.
HOWEVER,
remember that for Absorption costng- it is a MULTI-STEP cost attribution system. Many overhead costs for example a human resource department may be apportioned to overhead cost cntre which are THEN apportioned to production costs centres before being absorbed by products.
AND
Marginal costing MAKES NO ATTEMPT to attribute overhead costs to products.
- What is Activity-Based Costing System?
- Difference Between ABC system versus Traditional based costing system
- Introduction and Benefits/Advantages of Activity-Based-Costing System (ABC)
- Limitations of Activity-Based Costing (ABC) System
- Activity Based Costing Question No.5 (with answer)
- Steps In Implementing Activity-Based Costing System(ABC):
- Activity-Based Costing System: The Necessity To Know The “True” Cost Of A Product
November 12, 2007
Tags: activity based costing system
Posted in: Activity-Based Costing
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