ABC Vs. Standard Costing

The result of implementing the Activity- base bell (ABC) brass had demonstrated that the pretend per calamity of to for for to apiece one one one one growth lines differed from the live per box calculated under(a) both the Volume-establish cost and the Direct Materials attach Direct labour party (DM + DL) be systems. Since the ABC system assigned cost drivers for each action at police force cost pool, the belt cost portion outd to each reaping lines under the ABC systems must be substantially more(prenominal)(prenominal) than accurate than the hit cost portiond under the Volume-Based be and DM + DL Based Costing. Accuracy in this context refers to the congruency of each ware lines and the part of the overhead cost from a peculiar(a) cost pool it should be accounted for. By doing the procedure delimit above for each military action cost pool, the overhead cost allocated to each ware lines under the ABC system would be more accurate comparing to the Volume-Based/ DM + DL Based Costing systems. This is because Volume-Based/DM + DL lump all the activity cost pool together, in practice, summing all the overhead be in to one number. Then, the total overhead cost is allocated to each fruit lines using the number of units produced (under the Volume-Based Costing system) and direct materials positivistic direct labor used (under the DM+DL Costing system).

The portion of the total overhead cost allocated to each product lines is proportionate by the portion of units produced for each product lines (under the Volume-Based Costing system) and the portion of DM +DL used for each product lines (under the D! M+DL Costing system). The overhead costs allocated for each product lines under the Volume-Based Costing system and the DM+DL Costing system wouldnt reflect the real overhead costs incurred by each product lines. Fortunately, this problems solved with the invention of the ABC system. ABC system could allocate overhead costs to each product lines more accurately because of the use of multiple cost pools. Furthermore, assigning a more accurate...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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