Business Studies Journal (Print ISSN: 1944-656X; Online ISSN: 1944-6578)


Activity based Costing (Abc) for Better Cost Management

Author(s): Komati Durga Prasad, Soofi Asra Mubeen, Banda Rajani

The new industrial policy, although likely to be in the interest of the country in general and Indian consumers in particular, in long run would create new pressures and challenges for Indian organization s specially in terms of rising competition both from within and outside, ABC involves a two-stage overhead allocation process. In the first stage production or services overheads (resources) are allocated to the activity cost pools to the product or service (cost object) through the activity driver. The ABM output and next evaluation of ABC can help the business organizations in stopping an internal war of numbers, better understanding of the business, in taking right strategic decision among others in the areas of product pricing, product sourcing, product mix and market segmentation and supports the ideal of an agile, responsive organization.
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