Implications of Activity Based Costing in Different Business Sectors

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note

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MANAGERIAL ACCOUNTING
Executive Summary
The study aims to interpret the implications of the ABC system in different types of business
sectors. The determination of the effectiveness of such a technique is taken into account by
studying two journal articles across various companies which needs to be conducted in an
appropriate manner. The two articles based on the application of ABC have shown how a
business uses ABC and applies to the business for improving the reporting costs of the business.
The important outcomes of the study are depicted as per the suggestions given to the
management professionals in Australia improve the overall costing system thorough transition of
traditional costing to ABC.

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MANAGERIAL ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Methodology of conducting Activity Based Costing......................................................................4
Analysis of Two Journal Articles....................................................................................................5
Evaluation of Journal Article 1....................................................................................................5
Evaluation of Journal Article 2....................................................................................................7
Dissimilarities and similarities among the two articles...................................................................9
Four Specific Outcomes from the Research Papers which can be beneficial for the Help
Australian Management Accountants............................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

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MANAGERIAL ACCOUNTING
Introduction
In the present scenario of changing business environment, the organizations have put an
augmented focus to increase the profit. In any instance of increasing revenue from sales, there is
a considerable increase in the variable cost which are seen to be related to the sale. Therefore, it
is necessary for a business in choosing the appropriate method of costing which is able to
effectively record and interpret the costs associated to a business. The main treatment of the
overhead cost is related to the management and allocation of the appropriate costs to the
business. Modern business is depicted to use the ABC costing for identifying and allocating the
costs with the business. The implementation of traditional costing was seen to be inefficient for
the changes in the operations of the businesses and overcoming the deficiencies associated to the
traditional costing. This is further seen to be conducive for the overall decision making (Kaplan
et al. 2014).
It is also discerned that the use of ABC enables a business for operating in an effective
manner and apportioning of the costs associated to a business which are required for the purpose
of production activities carried out in a business. This type of the costing method is also seen to
be essential in terms of defining the various types of the engagements with the manufactures in
case of maintaining multiple product line. In addition to this, this costing technique allows the
business to help them identify cost for the respective activities and allocation of the same (Lew,
Pacana and Kulpa 2017). The process of carrying out the activity-based costing has been
depicted with the use of various types of the techniques for appropriate allocation of costs. The
process of this technique is further seen to be unique in nature in compared to the traditional
costing which is inferred with the machine hour for the allocation of the cost to the business. In