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Define Activity Based Cost and its impact on profitbility.

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General Management

Define Activity Based Cost and its impact on profitbility.

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Activitybased Costing which is more popularly known as ABC method is an accounting method in which the firms identify the various activities and then assigns indirect costs incurred to carry out those activities The impact of ABC on the costing process is as follows It expands the total number of cost pools and hence is able to assemble overhead costs better and allocate it to particular cost pools It alters the nature of various indirect cost and assigns them to various activities for example costs like depreciation the power consumed office supplies etc Costs are allocated on the basis of activities that generate them instead of another measure of    See Answer
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