Economic Plan

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Under an ABC system, the allocation of costs to products is achieved through at least four analytical steps. Firstly, costs are grouped into activity levels. Secondly, cost drivers are

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Activity-based costing (ABC) methodology is an instrument designed to provide accountants and managers with valuable costing information that will allow them to make sound strategic decisions. It is used as a secondary methodology rather than a replacement for the company’s primarily costing system. The ABC methodology identifies activities in an organization and for each activity it assigns a cost. The cost reflects the actual resource consumption by each activity that has been identified.

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Since overhead at the Chicago plant is high, accurate cost accounting system is required. Different types of dolls require different amounts of machine hours, setups, production runs, shipments, etc. By using ABC, different manufacturing overhead would be allocated to each type of doll, giving result to different contribution margins.

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Barack Obama has a plan; a big economic plan to fire up business and create jobs. He will, of course, unveil his brainchild after returning from Martha’s Vineyard for a much-needed vacation from campaigning. He thinks that lolling with his liberal high rollers ($50,000 per week rent) and breathing some Atlantic saltwater air should completely clear any proven methods for job creation that might enter his mind.

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In using ABC overhead costs are distributed differently across the three products, but in total they are the same, in total. However, ABC changes the information that managers receive to make effective business decisions, which will ultimately result in improved business results.

Activity-based-costing (ABC) system find activities as the drive for each cost, calculate the average cost per driver’s activity, and times budgeted activities for budgeted cost. It is worth mentioning that ABC system is not used to find problems in cost records, or predict future cost based on that.

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According to FAO Corporate (no date), since the First National Economic and Social Development Plan began in 1961, emphasis has been on economic development. Natural resources and human capital expanded the production base, employment opportunities and national income. These guidelines were appropriate for and consistent with the country 's situation in the early period of national development because of abundant natural resources and an excess labour supply, especially in the agricultural sector. Thailand 's production and exports, therefore, were attributed largely to these comparative advantages. Some problems are due to planning focusing on income generation, regardless of the cost to natural resources, the environment and society. Human resources were seen as production inputs serving the labour market; less attention was given to human potential, intellectual capability and local ways of life. Emphasis was on foreign technology transfer, rather than research and development (R&D) to upgrade existing wisdom (ibid).

ABC refers to cost attribution to cost units on the basis of benefit received from indirect activities e.g. material ordering, material handling, machine setups, quality assuring, customer support services etc. For each such activity, it is necessary to identify a cost driver that causes incurrence of cost relating to that activity. For example, hours spent on testing for a quality assurance activity may be used as application base of cost driver for this activity.