Activity Based Cost Accounting Versus Traditional Cost Accounting: A Comparative Analysis

Activity based costing (ABC) which has become an important aspect of manufacturing and service organizations can be defined as a methodology that measures the cost and performance of activities, resources and cost objects. It can be considered as an alternative paradigm to traditional cost - based a...

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Bibliographic Details
Published in:International Journal of Management Prudence 2012-01, Vol.4 (1), p.7
Main Authors: Habibi, Ali, Javanmardi, Kamal, Tavakoli, Rohullah, Amir Sasan Mozaffari Nejad
Format: Article
Language:English
Subjects:
Accounting
Accounting systems
Activity based costing
Activity based management
Comparative analysis
Corporate profits
Cost accounting
Cost reduction
Expenditures
Internships
Manufacturing
Overhead costs
Profitability
Sociology
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Summary:Activity based costing (ABC) which has become an important aspect of manufacturing and service organizations can be defined as a methodology that measures the cost and performance of activities, resources and cost objects. It can be considered as an alternative paradigm to traditional cost - based accounting systems. The objective of this paper is to illustrate the application of ABC method and to compare the results of ABC with traditional costing methods. The results of the application highlight the weak nesses of traditional costing methods and a 5 curve is used to identify the under costing and over costing of products of the firm. [PUBLICATION ABSTRACT]
ISSN:0975-8496