Activity Based Cost Accounting Versus Traditional Cost Accounting: A Comparative Analysis
Published: 2012
Author(s) Name: Ali Habibi, Kamal Javanmardi , Rohullah Tavakoli, Amir Sasan Mozaffari Nejad
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Abstract
Activity based costing (ABC) which has become
an important aspect of manufacturing and service
organizations can be defined as a methodology that
measures the cost and performance of activities,
resources and cost objects. It can be considered as
an alternative paradigm to traditional cost - based
accounting systems. The objective of this paper is to
illustrate the application of ABC method and to
compare the results of ABC with traditional costing
methods. The results of the application highlight the
weak nesses of traditional costing methods and a 5
curve is used to identify the under costing and over
costing of products of the firm.
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