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Abc essays sts can be managed, but as most managers have found out the hard way - managing costs is almost impossible. The benefit of the ABC mindset is that it opens up for a much wider array of measures my school essay revision newport it comes to improving productivity. By investigating systematically what is canada job resume done, i.e. the activities, one will not only be able to identify surplus capacity if it occurs, but also lack of capacity and misallocation of capacity. A result of this might homework help new york university that costs are cut the traditional way, but it might as well lead to a reallocation of capacity to where it is most needed which will yield high productivity more effectively than the traditional way. Volume related allocation bases versus drivers at many levels Due to the historic background of traditional cost accounting methods, they tend to use direct labor - or other volume related allocation bases - for cost assignment purposes. But as overhead has grown and new technologies have come, it goes without saying that assigning costs based on only 5 - 15% (in most companies) of total costs is highly risky. In fact, the incurred errors are up to several hundred percent! In ABC, however, costs are assigned according to the 'cause and effect' relationship between activities (the actual process) and cost objects, which is captured using drivers. The drivers are therefore not allocation bases in the traditional sense, although they work the write my cheap analysis essay way mathematically - drivers are estimates of actual cost behavior and can therefore also be used to identify, or they are themselves, the critical cost factors. Structure-orientation versus process-orientation Traditional costing systems are more concerned about the organizational charts than the act.

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