Business Accounting & Finance - Classic Pen Company

Business Accounting &
Finance
Classing Pen Company

INTRODUCTION
Business accounting and finance is the method trough which an organisational unit will undertake the
operational practices in order to make effective ascertainment of the operational requirements. This is
the process based on recording the transactions, measuring outcomes as well as analysing outcomes to
make effective business decision. In the present report, there will be discussion based on production
process for Classic Pen Company. There has been analysis over the financial health of company on the
basis of these products. Along with this, there will be analysis based on activity-based costing
technique.

ACTIVITY-BASED COSTING
• This accounting method helps in identifying the cost assigned to overheads costs to production
process of a product.
• It develops relationship between manufacturing products, costs and overhead activities as per
indirect costs to the products.
• There have been various direct and indirect costs which in turn had been applicated to bring the
adequate control over costs and operations.

Identification of main cause for the difference
in profitability emerging from ABC analysis
• It has been analysed that the currently companies have reduced the dependency on traditional
accounting systems as these were time consuming as well as defining the in accurate outcomes to
the users.
• Instead of it, there have been use of activity-based costing system which will be effective in
accordance with making adequate ascertainment of the operations.
• Therefore, activity-based costing system on the other hand will be helpful to the business in
accordance with measuring and monitoring the costs implicated in a single activity of the business.