Activity based costing assignment help online is one of our favorite disciplines. Activity based costing is a cost forecasting and estimation technique that is based on the level of a cost driving activity. Costs in an organization can be broadly classified into fixed and overhead cost. Fixed costs refers to expenses which an organization must incur no matter of the production level, examples include rent and salary of permanent staff. While on the other hand, overhead or variable costs refers to expenses that varies depending on level of activity for instance cost of casual labor and raw materials. Other methods used by management accountants apart from Activity Based Costing include engineering method, accounts analysis, job costing, batch costing and process costing.
Cost forecasting and estimation is used in analyzing the behavior of cost in relation to different plans. This relationship is then used to produce information on what cost takes to produce an individual item, and determining the relevant costs when producing an item. This information is further used in forecasting future cost and calculating the price of a product and the profit margin as well. Learners pursuing management accounting course can always find activity based costing help online by visiting US Academic Writers.
Steps in Activity Based Costing
- Identifying the activities
An activity is aggregation of tasks that makes up the whole process. Examples of activities in an organization include assembly, material handling, purchasing, dispatch and reception.
- Selecting the appropriate cost drivers
This involves classification of the costs and determining the effect of each cost of the final costing. The activity should be provide a good explanation of costs in each cost pool and should be measurable and easily identifiable with the product. This will give rise to three different types of cost drivers; pure activity output volume, weighted volume and situational cost drivers.
- Application of cost drivers rates
In order to complete the operation system of cost drivers, the cost drivers should be attached to individual product output or service. This means that the cost measures should be directly associated with specific product or service. This makes it easy to monitor and make regular adjustments of the cost since they are directly linked to an activity.
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