Stay on the ball
13 September 2012
This article focuses on activity-based costing or ‘ABC’. This technique re-examines the problem that has faced accountants and accounting technicians for decades - the allocation and absorption of overhead.
Students of management accounting learn a whole new language - a language of costing and managerial finance methods and techniques. Its vocabulary is made up of terms such as ‘cost and value management’, ‘value analysis’, ‘cost reduction’, ‘quality assurance processes’ and ‘activity based costing’.
Traditional pricing methods are based upon absorption costing...