Modern Costing Methods vs Traditional Costing Methods

Accounting Presentation Project

Introduction
 In the recent times, with the motive to make optimum use of financial resources and thereby
reduce cost, companies lay focus on the adoption of modern budgeting or costing methods over
others.
 The present PPT is based on the case scenario of Classic pen company which involved in
manufacturing black and blue pens. Now, firm is planning to manufacture red and purple pen with
the motive to explore operations and thereby enhance sales.
 In this, presentation will provide deeper insight about the aspects on the basis of which modern
costing system differs from traditional one.
 Further, PPT will shed light on the manner in which company’s monetary problem can be solved
using ABC analysis.

1. Identifying main causes for difference in the profitability from using of ABC analysis in comparison to the traditional
costing
The difference in the values of profits occurs in ABC and traditional costing systems
because it is indicated that ABC systems highly relies on greater variety and the number of the second
stage drivers of cost.
•It means that ABC makes use of both non-volume and volume based cost drivers. In comparison to
this, traditional systems uses the cost drivers that volume based.
•ABC systems having greater no of the cost centres as compared to traditional costing systems. In first
stage, traditional costing systems allocates an indirect costs to the cost centres.