Summary Of Profit Priorities From Abc

Summary of
Profit Priorities from Activity-Based Costing
by Robin Cooper and Robert S. Kaplan

This member explores the descent that has developed from the utilization of activity-based exist management systems amid accurately monitoring product costs and management actions/decisions. This relationship is a key to short and long-term profits. Management essential prioritize macro and micro level cost analysis and the potential effects on aggregate level clear and net totals from financial statements in order to take vantage of information provided by such cost systems.
It is customary from handed-down cost accounting systems to segregate hierarchical groupings based on those traditional allocation practices. This hierarchy provides managers with a familiar anatomical structure of building block and batch costs as well as resource use. According to the authors, When batch- and product-level costs are divided by the digit of units produced, the mistaken impression is that the costs commute with the number of units. But the resources consumed by batch and product-sustaining activities do not vary at the unit level, nor can they be controlled at the unit level.



Batch level resources consumed vary according to the number of batches, not according to the number of units within the batch. A manager that prioritizes unit level costs can misinterpret these figures, affecting general production costs/volume; the impact on positivity can be substantial.
Activity-based cost management systems are alike quite useful in analyzing profits from customers, product lines, selling segments, and regions. Brand management, promotion, and advertising costs can be alter based on the return on investment of associated expenses. The authors utilize the example of Kanthal, a manufacturer of heating wire, to illustrate how activity-based cost systems can find non-typical industry results. Kanthal discovered that 10% of their customers were losing cxxv% of their profits....If you want to get a full essay, order it on our website: Ordercustompaper.com



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