Financial Analysis

Financial Analysis

TASK # 2

Summary Report on Budget Discussion

Recommendation Regarding Change it's Costing Method to Activity-Based Costing

Activity Based Costing is a more accurate way of costing products and is preferred over the Traditional Cost Accounting method. The ABC method is normally implemented when overheads are high and there is a large amount of miscellaneous products.

The company should use the ABC Costing method because:

Activity based costing (ABC) tries to give a clearer more accurate cost position.

ABC gives a link between the production activities and the use of the resources.

In turn, ABC's advocates praise it as a more effective tool to identify and ...