Question:
Describe about the Activity-Based Costing for Powerful Tool for Organisation.
Answer:
Activity-based Costing (ABC) is a powerful tool for an organization to have an accurate and effective cost
For its product avoiding cost distortion that may lead sustainable development and growth which is mandatory to be competitive in the era of globalization and complex business environment(Hussain, 2015)
In the era of globalization, where the companies face tough competition and the fight is over a very thin profit margins has increased the need for accurate costing. ABC costing today therefore has become a strategic tool rather than just a costing system, especially for those companies who have a big product line.
ABC costing it helps company in avoiding cost distortion because of cost distortion the actual value of the service of a department used by a product cannot be calculated and it becomes hard to take decision.
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