Topic: Product Costing - Traditional Methods And Activity Based Costing

3 MONTH SUBSCRIPTION

Best value
line

Unlimited access for $92.95 $59.70
You pay for 2 months only! 3rd month is FREE

MONTHLY SUBSCRIPTION

Most popular plan
line

One month of unlimited access to premium essays for
$40.95 $30.70

DOWNLOAD PAPER

Immediate solution
line

Get this paper

for ~~$26.2~~ $20.95

Economy Package

Life time offer!
30 Essays!
line

$24.75 Subscription
25 essays for $0.99
+5 essays for FREE
lowest price ever!

Take advange of our Free Essay

Type of paper:	Essay
Subject area:	Business
Academic level:	College
Style:	APA
Size:	37.0 kB
Word count:	1802 words/7 pages
Mark awarded:
Author:	Libby Graham
Date submitted:	2009-09-12 06:43:23
Rating/Votes count:	5.00 / 3

See alike papers

CA 4 - Activity Based Costing - ~~$22.45~~ $17.95
activity based costing - ~~$16.2~~ $12.95
Critically evaluate the usefulness of activity ... - ~~$16.2~~ $12.95
Activity Based Costing - ~~$22.45~~ $17.95
Activity Based Costing - ~~$22.45~~ $17.95

Tags:

case, system, cost, accounting, activity, costing, based, ABC, Activity Based Costing, Process, Based Costing, Start, Costing, Costing Methods, Value Based Management, Macmillan Publishers, Farmer Council Case, Financial Standards Council Model Case, Morgan Kaufmann, Finish

Running head : ACTIVITY BASED COSTING IN MANAGING YOUR BUSINESS
Activity Based Costing in Managing Your Business
Author
Author Information Abstract
Many companies these days are shifting from the traditional method of
costing to activity based costing also referred to as ABC . The activity
based costing method makes use of the company 's activities and allocates
the proper costs to these activities . By the application of activity
based costing , changes that could be made to improve an agricultural
business and similar businesses . The case study of John and Mary
Farmer 's business is an example of this . Activity based costing may be
useful to companies , there are still disadvantages so a comparison was
made between the solutions presented in the case study and also made
between activity based costing and the traditional costing method .
Activity Based Costing in Managing Your Business
Generally , ``activity based costing is a method for developing cost
estimates in which the project is subdivided into discrete , quantifiable
activities or a work unit (1997 ) The method makes use of a business 's
activities or work units and identifies the costs , whether direct or
indirect , of these activities . In the case of John and Mary Farmer 's
business , the proposed actions to better improve the farm used activity
based costing .
Using Activity Based Costing
Like most business owners , John Farmer sought to formulate a management
schema that incorporates the current management style and could be used
by the coming generations . By applying activity based costing , a schema
was formed (refer to Figure 1 . Center Schema , not sure if this should
be done ) they identified a number of cost centers majority of which is
involved in the processing of crops .
The same schema would be quite useful if it is applied to different kind
of agricultural enterprise . Since agricultural enterprises generally
involve the same activities , John and Mary Farmer 's business would be
similar to other agricultural ventures . The deviation from the schema
would be determined by what aspect of agriculture is used by the
business (improve this . If the enterprise involved livestock , cost
centers would include livestock maintenance , feeds and product
harvesting to name a few .
Although the schema would prove to be helpful to the business owner , the
schema would become complicated if the business expands . Since not all
businesses have the same format , expansion could be in the form of
increased number of tenants , increase in the number of crops or in
variation of the crops .
As ABC uses activities of the business , the cost units vary from
activity to activity . In the Farmer 's business , cost came in terms of
acres , sales in dollars , hours , trips and more . This method of
identifying the cost would be useful in terms of acknowledging all the
consumed resources not just the monetary resources . However , the
difficulty arises when it comes to data comparison . At first glance , the
only comparable data are the ones in the same unit . There would be a
need to convert all the units into a...