The Cost Of Cost Management

Good Essays
The product cost information which provided by the cost calculation is the first-hand data of the cost management. The accuracy of it has play a vital role in the integral effect of the cost management.
ABC has been defined as “an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final output.”(CIMA)
The activity-based costing (ABC) is a cost calculation method which based on activity as the core, recognize and measure the activity that uses the enterprise resource, make accurate calculations about the consumption of resource costs in activities, and then select the cost drivers, allocate all the activity-based cost to cost calculation object, such like the product or service. The
…show more content…
Therefore, the item of the activity cost information can be more clear and more correct. In the meantime, ABC can continuous improve the way of the activity through the analysis of information, to made the distribution of the resources reasonably and hence cost reductions. It has meet the requirement of the accuracy of the cost calculation and managers of the enterprise can get the accurate and relate information, it afford the good reference for adjustment of pricing strategy and business decision to improve the economic performance of the company.
Provide the basis of the activity management, optimize industrial distribution. ABC bring and dynamic tracking analyze more activities as the scientific basis to its management and enhance the improvement of the process of the enterprise production and operation, analyze the activity process according to the activity management thus can find the change of the items’ value to take guiding measures to minimize the consumption of resources in each activity and make it be efficiency through reduce or cut non-value creating activity and increase the level of efficiency of the value creating activity to optimize the activity chain and value chain, the information can be more timely and useful, particularly the information which can directly and positively affect the growth
Get Access