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ACTIVITY BASED COSTING

INTRODUCTION

Accurate and relevant cost information is critical to any organisation that hopes to maintain or improve its competitive position. For years, organizations operated under the assumption that their cost information actually reflected the costs of their products and services when, in reality, it did nothing of the kind. While hiding their shortcomings behind a cloak of precision, over-generalized cost systems were actually misleading decision makers, specially the managers, causing them to make decisions inconsistent with their organisations' needs and goals.

It is the duty of managers of organisations, whether it is a small or large organisation, to make decisions about utilizing available resources, pricing products, and adding or dropping product lines. Information is the basis for these decisions. Generally the better the information the better the decision. Historically, the accounting system has been the major source of such information, and the only source of p...

Posted by: Cinthia De Ruiz

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