Contributions of Activity-Based Costing (Abc) to the Modern Business Environment

Contributions of Activity-Based Costing (ABC) to the Modern Business Environment In the increasingly emulous line of products environment, the enterprises who intend to maintain and enhance matched advantages moldiness build an efficient costing system to control, plan and find out how to improve the profitability and efficiency of the operation. Activity-based costing system (ABC) is much(prenominal) an advanced costing system that satisfies the needs of companies in advanced business environment. This essay gives a whole picture almost the ABC from five parts: background introduction, definition of ABC, semblance with traditional costing system, evaluation of ABC and conditions of acceptability. The reason for the training of activity-based costing Business enterprises exist in and are surrounded by the environment that includes a define of conditions-political, economic, social and technological (PEST) (Vadim Kotelnikov,2011) that unmanageable in nature and affect the operating of companies. Such course of environment is commonly known as business environment, and is separate into two components: internal environment and extraneous environment (What is business environment?, n.d.).

In modern society, as economic globalisation is developed widely and quickly, business environment becomes more competitive and complicated with the introduction of better technology and more automation. The external environment has powerful impact to the corporations. Under this condition, corporations have a far more multifaceted producing process, and provide an increasingly various range of products for sophisticated consumers (David Russell et al., 2002). Labour resources have been replaced by autoloading(prenominal) machinery, and some large corporations even do not set up their own workshops because of production outsourcing. Consequently, the cost structure of such(prenominal) companies has changed, with indirect costs having a larger proportion of bring cost than before. The production processes in modern... If you want to get a full essay, order it on our website: Orderessay

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