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Comparing Alternative Costing Systems Assignment Help for Best Assignment Work
Two systems are absorption and activity-based costing (ABC) system. Comparing alternative costing systems homework help is needed by most as this contains a lot of materials in it which needs to researched properly and understand it clearly. This is very important for a student before starting an assignment. Both the costing system concept should be familiar with pupils.ย Below it will be briefly talked about both these concepts.
Absorption Costing And Activity-Based Costing (ABC)
Absorption costing is the system where all production cost is treated as cost of product irrespective of the fact whether these costs are fixed or variable. Under this approach, cost of a produced unit of a product consists of both direct material and labor, and also fixed and variable overhead.
Activity-based costing (ABC) system is an alternate option to the absorption system. ABC connects costs of overhead to the goods or services which made them by consuming the overhead cost depending on the tasks which drive costs rather than production volume. You can consult our Comparing alternative costing systems assignment help for a more detailed analysis of this.
Steps when Applying ABC
There are basically four steps when applying activity-based costing. The four steps are:
- Figuring out activities or tasks that incur cost of overhead
- Determining cost driver and volume of cost driver
- Count cost per task which drives cost
- Calculating the products overhead cost
Advantages of the Alternative Costing System
There are many advantages of this system when compared with absorption system. They are:
- The information obtained about cost is more accurate. Making better decision becomes easy for managers. Overhead cost is reduced in the longer period of time.
- Through this system, it can be understood better as to what drives the cost of overhead. It helps in knowing activities or tasks and costs where value is not added
- Other than production overhead this costing system is applicable to all overhead costs
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Disadvantages of this System
Like everything else this also has certain disadvantages. They are:
- There is a lack of accounting records
- Cost drivers are hard to identify. Practically it is hard to recognize the apt drivers
- Many managers still donโt understand this costing system properly
- It analysis every cost. This requires additional resources which add extra costs.
Comparing alternative costing systems assignment help from myhomeworkhelp.com will assist in every way for gaining knowledge about both the system and help in comparing it.
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