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Management accounting question - Gevin - 01-06-2011
It is now fairly widely accepted that conventional cost accounting distorts managements view of business through unrepresentative overhead allocation and inappropriate product costing. This is because the traditional approach usually absorbs overhead costs across products and orders solely on the basis of the direct labour involved in their manufacture. And as direct labour as a proportion of total manufacturing cost continues to fall, this leads to more and more distortion and misrepresentation of the impact of particular products on total overhead costs.
You are required to discuss the above and to suggest what approaches are being adopted by management accountants to overcome such criticism.
Can anyone help me to answer this question, it is quite important for me.. thanks for your help )
- yasir_live - 01-06-2011
Activity Based Costing (ABC).......is more accurate method specially to allocate overhead costs to product, But disadvantage is that it will involve more time and effort.
Regards.
- Gevin - 01-06-2011
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by yasir_live</i>
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Activity Based Costing (ABC).......is more accurate method specially to allocate overhead costs to product, But disadvantage is that it will involve more time and effort.
Regards.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
isit the question is talking about ABC problem? and can you give more information regarding this matter?
Sorry, forgive me i am new in accounting... a lot of accounting things i dunno..