Management Accounting Assignment Example | Topics and Well Written Essays - 500 words

Management Accounting - Assignment Example hen undertaking a two stage assignment plan for overheads since cost allocation to intermediate pools is carried out at the initial stage while the second stage involves cost allocation to the products from the intermediate pools (Barnett & Dawkins, 2006). A number of scholars hold the opinion that ABC method of costing is undertaken by firms because it is considered fashionable, and not that it gives more detailed information for use by the management. It is a fact that this costing method does not give extra information to management since it determines the costs of the firm in a way that is different from the traditional or conventional method of costing (Rosati et al., 2008). The traditional costing method brings together all the costs of the organization then allocates them to the products that have been manufactured depending on the hours of labor spent directly per product. On the other hand, ABC concentrates majorly on the activities carried out prior to the completion of the products’ production. Here, the costing process is intermediate and is carried out by a firm to assign overhead costs to the products so as to see to it that there is accuracy on the information on the costs of the good. In other instances, the cost activity becomes the activity. Here, ABC provides no additional information and instead divides the costing process to see to the correctness of the cost information that is given for every unit or each product that is produced. Accounting heavily relies on the accuracy and transparency of information. The conventional cost techniques assign all kinds of overheads, which include product level, batch level, and facility depending on the allocation or assignment that suits the unit level best. On the other hand, ABC taps the structure of costs to illustrate the correctness in the information, presenting a particular reason for its preference by a number of firms. ABC primarily concentrates on activities that relate to the production