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Improves Business Processes

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Question No. 1
ADVANTAGES
Improves Business Processes
An ABC system either allots indirect costs which based on a product’s cost driver or the
cost creating factor. After costs are allotted for per product, an image begins to emerge about the
good and bad performance of the business. Non-valued added activities are recognized by a term
ABC and for the competent and beneficial activities it helps in better allocation. The continuous
improvement of business processes can be gain by the use of ABC (Horngren, 2015, pg.37).
After seeing the success of the fresh product, its supply and volume increased in the market.
By recognizing the Wasteful Products
It is allowed by The ABC method accounts that the product sell on the similar costs on
which the production has done, this will help you in understanding about the costs of product.
Wasteful products and needless costs are the recognized data, because of that the company can
use its resources productively. With the help of this method, the problem of excessive or
incorrect prices of the products or services can be solved (Schaltegger, 2000, pg.18). With the
help of ABS’s data details of the production, the quality of overall product and service can be
made better that need to be resolved. After that for the new product, the realization of profit
production and resource allocation will become efficient.
DISADVANTAGES

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Expensive Implementation
If the company wants to set up an ABC system then they have to wait because it is costly
and time taker. They must be broken down into each activity of the individual components and
can be analyzed the business activities. As data is collected, the whole procedure can use the
important resources, and then they considered and entered into another fresh system
(Schaltegger, 2000, pg.16). The Businesses need assistance and help of the person who is expert
in ABC’s terms who specializes in the arrangement of an ABC system and provide training. To
the execution, using software can get an extra expenditure but many of the manual aspects used
in ABC techniques be mechanized.
Misinterpretation of Data
Information of product margins is contained by the reports of the ABS system. For a
traditional cost technique, it changes from the reported information. There is a chance for some
costs which based on activities may be unrelated in definite scene of decision-making; for
instance, ABC does not conventional for exterior reporting which is used to accounting
standards. Since the figures of the traditional cost become norm, along with regular accounting
information interpreting ABC data can be mystifying and guide to wrong decision-making. With
regular cost accounting information, the use of software can create the procedure efficient and it
simplifies and maintains ABC system integration.
Question No. 2
Rick White’s objective reflected well in that he wants to be ready for what might
took place in future. However, he becomes selfish while giving the suggestion of budgetary
slack. Budgetary slack is the term which is used for the intentional under-estimation of budgeted

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Question No. 1 ADVANTAGES Improves Business Processes An ABC system either allots indirect costs which based on a product’s cost driver or the cost creating factor. After costs are allotted for per product, an image begins to emerge about the good and bad performance of the business. Non-valued added activities are recognized by a term ABC and for the competent and beneficial activities it helps in better allocation. The continuous improvement of business processes can be gain by the use of ABC (Horngren, 2015, pg.37). After seeing the success of the fresh product, its supply and volume increased in the market. By recognizing the Wasteful Products It is allowed by The ABC method accounts that the product sell on the similar costs on which the production has done, this will help you in understanding about the costs of product. Wasteful products and needless costs are the recognized data, because of that the company can use its resources productively. With the help of this method, the problem of excessive or incorrect prices of the products or services can be solved (Schaltegger, 2000, pg.18). With the help of ABS’s data details of the production, the quality of overall product and service can be made better that need to be resolved. After that for the new product, the realization of profit production and resource allocation will become efficient. DISADVANTAGES Expensive Implementation If the company wants to set up an ABC system then they have to wait because it is co ...
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