Activity Based Costing (ABC): Implementation, Advantages, and GM Case
VerifiedAdded on 2023/06/14
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AI Summary
This presentation provides a comprehensive overview of Activity Based Costing (ABC), contrasting it with traditional costing methods. It defines ABC as a costing approach that monitors activities to trace resource consumption and cost final outputs, highlighting its differences from traditional methods, such as the inclusion of both manufacturing and non-manufacturing costs. The presentation details the advantages of ABC, including accurate product costing and systematic overhead allocation, while also acknowledging disadvantages like high initial investment and maintenance costs. It further explores the motivations for ABC adoption, citing General Motors (GM) as a key example, and discusses the implementation of ABC within GM to improve operational cost estimation. The presentation concludes by proposing areas of improvement for GM through enhanced use of ABC in management accounting for better cost control and waste reduction, referencing studies that support the effectiveness of ABC in improving understanding of actual costs. The presentation refers to academic sources and books for its content.
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