Activity-Based Costing (ABC)
Time-Driven Activity-Based Costing (ABC)” Please respond to the following:
- Analyze the major benefits and major weaknesses of traditional Activity-Based Costing (ABC) in determining accurate overhead costs over a time-driven ABC system. Provide a rationale for your response.
- Suggest the manner in which a business can achieve a competitive advantage in the marketplace through the use of ABC. Provide two (2) reasons to convince senior management that they should implement an ABC system.
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When compared to time driven ABC system, the activity based cost method has advantages because it has the ability of providing the management with the idea of varying and different activities especially on the profitability of each activity, (Cokins and NetLibrary, 2001). By doing this each activity can be used to benefit the company by picking out the individual activity that is most profitable compared to others. The weak activities can also be avoided and this makes it easier for the management to know which area needs improvement or which area has to be avoided to avoid leading to huge losses. Therefore this is one of the strengths that traditional ABC has over other methods that are used in accounting……………………..
APA
705 words
