Practices and Techniques:ImplementingActivity-Based Costing

1. RATIONALE
Accurate and relevant cost information is critical to any organization 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, causing them to make decisions inconsistent with their organizations' needs and goals.
Activity-based costing (ABC) is a valuable concept that can be used to correct the shortcoming.sin the over-generalized cost systems of the past. It is a means of creating a system that ultimately directs an organization’s costs to the products and services that required those costs to be incurred.
At many organizations, ABC has evolved beyond the point of simply developing more accurate and relevant product, process, .service, and ac...