Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Report on the Reason of Why the Companies Should
Implement ABC Rather than Traditional Cost System
1
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Acknowledgement
I would like to express my deepest appreciation to all those who provided me the possibility to complete this report. A special gratitude I give to, Ms. Tanzina Haque, Associate Professor,
University of Dhaka, whose contribution in stimulating suggestions and encouragement, helped me to coordinate in every problem especially in writing this report.
2
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Executive Summary
Activity-based costing provides a more accurate method of product/service costing, leading to more accurate pricing decisions. It increases understanding of overheads and cost drivers; and makes costly and non-value adding activities more visible, allowing managers to reduce or eliminate them. ABC enables effective challenge of operating costs to find better ways of allocating and eliminating overheads. It also enables improved product and customer profitability analysis. It supports performance management techniques such as continuous improvement and scorecards. It is because; the company should implement ABC rather than traditional costing system. 3
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Table of Contents
Acknowledgement ........................................................................................................................................ 2
Executive Summary....................................................................................................................................... 3
Introduction
Report on the Reason of Why the Companies Should
Implement ABC Rather than Traditional Cost System
1
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Acknowledgement
I would like to express my deepest appreciation to all those who provided me the possibility to complete this report. A special gratitude I give to, Ms. Tanzina Haque, Associate Professor,
University of Dhaka, whose contribution in stimulating suggestions and encouragement, helped me to coordinate in every problem especially in writing this report.
2
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Executive Summary
Activity-based costing provides a more accurate method of product/service costing, leading to more accurate pricing decisions. It increases understanding of overheads and cost drivers; and makes costly and non-value adding activities more visible, allowing managers to reduce or eliminate them. ABC enables effective challenge of operating costs to find better ways of allocating and eliminating overheads. It also enables improved product and customer profitability analysis. It supports performance management techniques such as continuous improvement and scorecards. It is because; the company should implement ABC rather than traditional costing system. 3
Report on the Reason of Why the Companies Should Implement ABC Rather than Traditional Cost System
Table of Contents
Acknowledgement ........................................................................................................................................ 2
Executive Summary....................................................................................................................................... 3
Introduction