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Concept of Activity Based Costing Report

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Added on  2020-04-07

Concept of Activity Based Costing Report

   Added on 2020-04-07

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Running head: ACTIVITY BASED COSTINGName of the StudentName of the UniversityAuthor note
Concept of Activity Based Costing Report_1
ACTIVITY BASED COSTING1Executive Summary:The present project report pertains to the concept of the new concept of activity basedcosting.. ABC Costing is relatively a new concept. This concept deals with the identification andassignment of costs to overhead activities and then the assignment of those costs to products. Anactivity-based costing (ABC as it is widely known) system recognizes the relationship between costs,overhead activities, and manufactured products, and through this relationship, it assigns indirect coststo products less capriciously than traditional methods of managerial accounting. With this in mind, asimilar kind of ABC application idea has been discussed over here. This idea, along with its proposedmanagement procedures, advantages and recommendations have been provided below in thesubsequent paragraphs.
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ACTIVITY BASED COSTING2Table of ContentsIntroduction:..........................................................................................................................................3Discussion:............................................................................................................................................3ABC Model and its features:.............................................................................................................3Alignment of ABC with MACQ Atlas Roads:...................................................................................4Alignment with MACQ objectives and missions:..........................................................................4Alignment with MACQ corporate strategies:................................................................................5Usage of the ABC model in MQA:................................................................................................5Recommendations about ABC implementation:................................................................................6Suggestion of another Management Accounting tool:.......................................................................7Conclusion:............................................................................................................................................8References:............................................................................................................................................9
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ACTIVITY BASED COSTING3Introduction:This report has been prepared to delve deep into the notions of ABC Costing, more popularlyknown as the Activity Based Costing method, in the context of manufacturing organisation. In thiscase the report has been based on the MACQ Atlas Roads Group Ordinary Stapled Securities. It is oneof the largest road and tunnel makers in the world (Macquarie.com, 2018). The project report dealswith the implementation and the alignment of the ABC in the context of the MACQ Atlas Roadgroup. It contains the ways of implementation, the benefits available as well as the recommendationsabout the successful implementation of the ABC.Discussion:ABC Model and its features:Activity based costing is an important part of the scope of Management Accounting. It is oneof the novel methods introduced under the wing of Management Accounting. It actually refers to aspecific kind of a methodology for a more precise allocation of overhead costs to those items whichactually use it more. The basic idea behind this method, is to allocate the costs of overhead to in a justand proportionate manner to those items which actually require much time, energy and costscompared to the other items of produced by the concerned company. The system can be used forspecific reduction of overhead costs and it works best in more complex business setups, whereallocation of costs to different products becomes normally difficult, because of the presence of a rangeof different factors, which needs to be taken into account. Here, the most important aspect of theallocation is that the overheads would be allocated to the different items on the basis of theirconsumption (Hardan and Shatnawi, 2013). The most striking revelation of this method of costallocation remain the fact, that this method allocates and assigns more indirect costs, into the directcosts, more than the traditional costing method. This is where both are different. CIMA (CharteredInstitute of Management Accountants), define ABC costing as an approach, where a close tracing and
Concept of Activity Based Costing Report_4

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