In cost accounting, direct costs are easily and economically traced to cost object. On the other hand, overheads cannot be economically traced to cost object. Therefore, allocating overheads is considered as the main problem in cost accounting, whereas traditional methods such as Single plantwide factory overhead rate method and Multiple production department factory overhead rate method have been used. In addition, developed methods such as Activity based costing method (ABC) has been used to enhance the allocation of overheads to cost object.
Students are required to criticize both traditional methods and explain how is ABC being applied to a manufacturing company? What are the disadvantages of the ABC method?
- Embed course material concepts, principles, and theories, which require supporting citations along with at least two scholarly peer reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
- Reply to at least two of your peers’ initial posts. These replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post’s answers. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Keep in mind that within your initial post, answering all course questions is required.
- Use academic writing standards and APA style guidelines.
Be sure to support your statements with logic and argument, citing all sources referenced. Post your initial response early, and check back often to continue the discussion. Be sure to respond to your peers’ posts as well.