Activity Based Costing Assignment

If you are doing an activity based accounting assignment, you need to know what activity based costing is. It can be illustrated as an accounting method that is utilized to identify the activities that a firm performs. It recognizes the relation between costs, activities and products. If you need any help with your activity based accounting assignment, you can get best possible accounting assignment help from us.

Basics Of Activity Based Costing System

When you are writing an activity based accounting assignment, you need to know what is cost of the product. It is defined by the sum of the costs of all activities required to manufacture and supply those to the customer.

• There is no direct cost related to production

• Activities are consumed by products/ services

• Activity based costing determines costs to products by tracing activity expenses. Each product is charged on the base on the extent to which it is used as an activity.

• The primary objective of activity based costing is to assign costs that reflect the physical dynamics of the business.

• Provides ways to allocate the costs of indirect support resources to activities, business processes, customer and products.

• It recognizes that many organizational resources are required not for physical production of units of product but to provide a board array of support activities.

Advantages Of Activity Based Costing System

Our activity based accounting assignment experts state that the usage of activity based costing is especially significant to businesses that provide customized products and services. Our activity based costing assignment further state that a customized production environment requires activity based costing’s allocation of actual indirect costs to the product to identify its real cost. The activity based accounting assignment experts mention few advantages that businesses get by allocating activity based costing system.

• Activity based costing determines product cost more accurately and reliably because it focuses on the cause and effect linkage between costs and activities in the context of producing goods.

• Determines if selling price of multi-products under activity based costing is fair and precise. The reason is overheads are allocated as per the relevant cost drivers.

• Control of overheads consisting of fixed and variable become easier to determine by regulating and monitoring activities. Activity based costing is used to identify the linkage between cost and activities and thus provides opportunities to control overheads costs.

• This system provides sufficient information that is utilized to make the decisions about profitability of different product lines.

• Fair allocation of overheads occupies a considerable portion of the total cost components.