Implications of Activity Based Costing Techniques in Business

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 main purpose of this report is to analyze the implications of Activity based costing
techniques in a business. In order to effective analyze the topic, the assessment considers two
journal articles which are ion different companies on which the analysis are to be conducted.
The journal articles which are considered are on Activity based costing application in a business
and how the same helps a business to improve the reporting of costs of the business. The key
outcomes which are derived from the analysis are suggested to management professionals in
Australia in order to make improvement there.

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MANAGERIAL ACCOUNTING
Table of Contents
Introduction................................................................................................................................... 3
Process of Activity Based Costing.................................................................................................. 4
Analysis of Two Journal Articles.....................................................................................................5
Evaluation of Journal Article 1...................................................................................................5
Evaluation of Journal Article 2...................................................................................................7
Similarities and Dissimilarities between the two Articles............................................................10
Four Specific Outcomes from the Research Papers which can Help Australian Management
Accountants................................................................................................................................. 11
Conclusion................................................................................................................................... 13
Reference.....................................................................................................................................15

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MANAGERIAL ACCOUNTING
Introduction
In todays world’s, the business environment is going at an increasing pace and most of
the business are focusing on making more and more profits. In such a situation, as the sales of
the business increase so does the variable costs which are associated with the sale. Therefore,
it is very important for the business to choose an appropriate costing technique which can
effectively record and analyze the costs of the business. The treatment of overhead costs of the
business are important aspects which needs to be considered by the management and
appropriate allocation of such costs are also important. In the new era of modernization, most
of the business are utilizing activity-based costing techniques for the purpose of identifying and
allocating costs of the business (Stefano and Casarotto Filho 2013). Traditional costing
techniques are unable to keep up with the changing environment of businesses and therefore
activity-based costing techniques helps businesses to overcome the deficiencies of traditional
costing techniques and also helps in decision making process of the business.
Activity based costing techniques allows business to effectively apportion the costs of
the business which are indirect in nature on the basis of the activities which are undertaken by
the business for production the products of the business. Activity based costing is also
applicable for organizations which are engaged in the manufacture of multiple products of a
business (Estampe et al. 2013). Activity based costing techniques of a business allows the
management of companies to identify the costs and its respective activity and allocate on the
basis of the same (Kaplan 2014). The working process of activity-based costing technique is
unique in nature than traditional costing techniques which only considers machine hour as the