Allocating Fixed Costs



Module 4 - SLP: Allocating Fixed Costs

Introduction

Expenses either fixed or variable has to be allocated according to the activity in each item. This rule is usually applicable in the Activity Costing Method. According to the costing theory, Activity based costing allocate each cost in accordance with the activity after identifying each activities and allocate cost according This is the why firms in current era prefer this method.

Discussion

Companies especially manufacturing companies go for Activity Based costing due to many reasons (Walther, 2010).

These reasons can summarize as advantages and benefits of implementing ABC in the following points:

Enables research ...