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What is activity based costing (abc) and management principles is

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What is activity based costing (abc) and management
principles is?
Solution
Normally we divide the overhead costs among different
units or departments of an organization based on the units
produced or units sold. But manytimes the value of the
items produced at different units are not similar and
therefore such allocation of cost leads to distorted
financial statements.To eliminate this errror , one of the
method that is being used is called activity based costing
where we divide the overheads as per the activity amount
like manhours spent, machine hours spent , labor days
etc..This gives a more accurate assessment of the final
performance of a unit.

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What is activity based costing (abc) and management principles is? Solution Normally we divide the overhead costs among different units or departments of an organization based on the units produced or units sold. But manytimes the value of the items produced at different units are not similar and ...
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