Managerial Accounting

Running Head : Cost estimation

Name

University

Course

Tutor

Date

Introduction

Costing and costing estimation is one of the fundamental aspects of managerial accounting . The management aspect of cost accountants is to ensure optimal allocation of organization cost and costing system in the most optimal manner that ensures the best corporate functionality from the highest levels of corporate revenue Generally , managerial accounting uses the term cost estimation to analyze the broad scope of corporate expenses . This is done through a weighted analysis of the proportionate strength of

br corporate activities and process in concept to their allocation allotment and requirement in the corporate processes

Ideally , cost estimation is fundamentally used in the allotment appropriation and allocation process into the productive process of an organization so that the most appropriate business goals , objectives and decisions can thereon be adopted . It is from the relationship of various scope of costs in corporate activities and processes that a decision on the most suitable and economically profitable productive decision can be arrieved at on relating between the cost revenue parameters ( HYPERLINK "http /www .asaresearch .com /articles /abc .htm http /www .asaresearch .com /articles /abc .htm

Activity based costing (ABC

Fundamentally however , activity based costing (ABC ) is perhaps an important tool in the corporate costing process . It comes as an alternative to tradition costing . By its definition , ABC is the process of identifying cost pools or even costs within activity centers of an organization through assigning costs to their respective services or products output . Such costs allocations is done basing the number of transactions and events that are generally involved in the productive process of providing such a service or producing an output . Therefore , activity based costing is an important tool with which managers can evaluate the mode of maximizing their shareholder value as well as improving the broad corporate performance . Unlike the traditional method that evaluates indirect costs in terns of the volume of output , activity based costing seeks to assign cost parameters to individual product outputs and lines of processes

Activities based costing is based on activity , product and process costing . This helps to provide individual ascertainment into the cost of different corporate costing variables . Consequently , the level of the profitability allied to a specific activity can be summed up by relating income proceeds to the cost parameters . Appropriate decisions can then be implemented about the product choice , product mix sourcing , marketing strategy , service provision and others managerial aspects related to the cost revenue parameters ( HYPERLINK "http /www .asaresearch .com /articles /abc .htm http /www .asaresearch .com /articles /abc .htm

Generally , it is an impressive tool towards understanding the level of different costs involved in processes and activities . Consequently these costs can be analyzed in identifying the value adding and non value adding activities for decision making by the organization 's management . Therefore , ABC has been an important tool with which organizations can thus improve their level of efficiency unlike reducing their costs without basic sacrifices of their activities services or products . This system has...