![]() ![]() Unlike the traditional cost accounting method that uses a predetermined percentage of overhead, cost of goods sold, or a combination of the two, activity-based costing provides businesses with the true cost of producing specific items, which can be helpful for manufacturers who produce multiple products and need to know which products are profitable, which (if any) need to have pricing adjusted, and which products should not be produced any longer. Used in managerial accounting, ABC calculations are frequently used in order to assign a cost to a specific task. Overview: What is activity-based costing?Īctivity-based costing (ABC) is a method that can be used to assign a specific cost to products and services. Used in large-scale manufacturing companies, activity-based costing can also be a helpful tool for smaller manufacturers. Learn more about this costing method and see if it’s right for your business.Īctivity-based costing is a cost accounting method designed to help businesses accurately price their products. Activity-based costing is a method used to more accurately track the true cost of producing a product or service. ![]()
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