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Expalintraditionalandactivity-based-costaccountingsystems,whichsystemisbetter.Giverea...
Expalin traditional and activity-based-cost accounting systems, which system is better. Give reasons for your answer.
这就是我要问的问题，不用翻译，请用英文作答 展开
这就是我要问的问题，不用翻译，请用英文作答 展开
3个回答
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To support compliance with financial reporting
requirements, a company’s traditional cost-accounting
system is often articulated with its general ledger
system. In essence, this linkage is grounded in cost
allocation. Typically, costs are allocated for either valuation
purposes (i.e., financial statements for external
uses) or decision-making purposes (i.e., internal uses)
or both. However, in certain instances costs also are
allocated for cost-reimbursement purposes (e.g., hospitals
and defense contractors).
The traditional approach to cost-allocation consists
of three basic steps: accumulate costs within a
production or nonproduction department; allocate
nonproduction department costs to production departments;
and allocate the resulting (revised) production
department costs to various products, services, or customers.
Costs derived from this traditional allocation
approach suffer from several defects that can result in
distorted costs for decision-making purposes. For
example, the traditional approach allocates the cost of
idle capacity to products. Accordingly, such products
are charged for resources that they did not use.
Seeking to remedy such distortions, many companies
have adopted a different cost-allocation approach
called activity-based costing (ABC).
WHAT IS ACTIVITY-BASED COSTING?
In contrast to traditional cost-accounting systems,
ABC systems first accumulate overhead costs for each
organizational activity, and then assign the costs of the
activities to the products, services, or customers (cost
objects) causing that activity. As one might expect, the
most critical aspect of ABC is activity analysis.
Activity analysis is the processes of identifying appropriate
output measures of activities and resources (cost
drivers) and their effects on the costs of making a
product or providing a service. Significantly, as discussed
in the next section, activity analysis provides
the foundation for remedying the distortions inherent
in traditional cost-accounting systems.
TRADITIONAL COST-ACCOUNTING
SYSTEMS VERSUS ABC
Geared toward compliance with financial reporting
requirements, traditional cost-accounting systems
often allocate costs based on single-volume measures
such as direct-labor hours, direct-labor costs, or
machine hours. While using a single volume measure
as an overall cost driver seldom meets the cause-andeffect
criterion desired in cost allocation, it provides a
relatively cheap and convenient means of complying
with financial reporting requirements.
In contrast to traditional cost-accounting systems,
ABC systems are not inherently constrained by the
tenets of financial reporting requirements. Rather,
ABC systems have the inherent flexibility to provide
special reports to facilitate management decisions
regarding the costs of activities undertaken to design,
produce, sell, and deliver a company’s products or
services. At the heart of this flexibility is the fact that
ABC systems focus on accumulating costs via several key activities, whereas traditional cost allocation
focuses on accumulating costs via organizational
units. By focusing on specific activities, ABC systems
provide superior cost allocation information—especially
when costs are caused by non-volume-based
cost drivers. Even so, traditional cost-accounting systems
will continue to be used to satisfy conventional
financial reporting requirements. ABC systems will
continue to supplement, rather than replace, traditional
cost-accounting systems.
Activity-based costing (ABC) is a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each: it assigns more indirect costs (overhead) into direct costs.
In this way an organization can precisely estimate the cost of its individual products and services for the purposes of identifying and eliminating those which are unprofitable and lowering the prices of those which are overpriced.
In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services provided to its customers. It is generally used as a tool for understanding product and customer cost and profitability. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing and identification and measurement of process improvement initiatives.
Activity-Based Costing (ABC) arose in the 1980s from the increasing lack of relevance of traditional cost accounting methods. The traditional cost accounting methods were designed around 1870 - 1920 and in those days industry was labor intensive, there was no automation, the product variety was small and the overhead costs in companies were generally very low compared to today. However, from the 1960s - particularly 1980s - this changed rapidly. For these reasons, and more, traditional cost accounting has been called everything from 'number 1 enemy of production' and questions whether it is 'an asset or a liability' have been raised.
The question of course is whether ABC has overcome these deficiencies or not? It has. In fact, ABC has been called one of the most important management innovations the last hundred years.
So what is really the difference between ABC and traditional cost accounting methods? Despite the enormous difference in performance, there is three major differences:
In traditional cost accounting it is assumed that cost objects consume resources whereas in ABC it is assumed that cost objects consume activities.
Traditional cost accounting mostly utilizes volume related allocation bases while ABC uses drivers at various levels.
Traditional cost accounting is structure-oriented whereas ABC is process-oriented.
This is discussed in more detail in the subsequent sections and illustrated below.
But first, the direction of the arrows are different because ABC brings detailed information from the processes up to assess costs and manage capacity on many levels whereas traditional cost accounting methods simply allocate costs, or capacity to be correct, down onto the cost objects without considering any 'cause and effect' relations.
Consumption of resources versus consumption of activities
ABC acknowledges that you cannot manage costs, you can only managed what is being done and then costs will change as a consequence. In traditional cost accounting, however, the underlying assumption is that costs 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 when it comes to improving productivity. By investigating systematically what is being 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 be 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 same 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. Because the drivers are related to the actual processes, they occur on several levels. The four most common levels are;
Unit level. Unit level drivers are triggered for every unit that is being produced. For example, for a man and a machine that produces one unit at a time, the associated direct labor will be a unit level cost driver. This is therefore a volume related driver similar to the traditional allocation bases.
Batch level. Batch level drivers are triggered for every batch produced. A good example of that is production planning, because the planning is done for each and every batch regardless of the size of the batch. Here, number of batches can be a good driver.
Product level. Product level drivers are triggered for every product regardless of the number of units and batches produced. These drivers occur by the sole existence of a product. A good example of a driver is the number of product development hours per product so that the more product development hours a product triggers, the more product development costs should be assigned to that product.
Costing systems are information systems. They require a specific type of information such as direct labour hours and units produced, to be of value. It is from the input data that product costs and other information are determined according to the specific costing system defined methodology. The results obtained would depend on the costing system used, since the same input data could be used in different ways. In this case the traditional costing system or an activity based costing system.
A costing system should provide information to help minimise waste, but should not be wasteful in itself. In other words, the resources required to design, implement and maintain a costing system should be less than the benefit derived from the use of the system.
In order to compare the two systems it is necessary to understand the working of both system.
The Traditional Costing System
It is a well-known fact that the traditional costing systems utilise a single, volume-based cost driver. This is the reason why the traditional product costing system distorts the cost of products. In most cases this type of costing system assigns the overhead costs to products on the basis of their relative usage of direct labour. For this reason traditional cost systems often report inaccurate product costs.
The problem is in the underlying methodology of the traditional costing systems. They adhere to the assumption that products cause cost. Each time a unit of product is manufactured, it is assumed that cost is incurred. This assumption makes sense for certain direct costs. The assumption does not work for activities that are not performed directly on the product units.
The problem with this approach is that for most overhead activities, the proportions of the activity actually consumed by a specific product, does not universally correspond with a single cost driver. This holds true for most modern companies where products are produced by a combination of manpower and technology. The traditional cost accounting model employs a volume-based driver, such as direct labour hours or machine hours for the assignment of all manufacturing overhead costs. The conventional cost accounting model ends up with a cost of goods sold based on absorption costing and includes only product costs as defined in financial accounting.
Fundamentally, traditional costing systems try to assign cost directly to products, rather than to activities first and then from the activities to product units. The typical cost report gives information on what is spent, but not why it is spent.
When overhead costs are cut in order to reduce total costs it is the symptoms that are treated and not the cause. In many cases the cutting of overheads is more likely to lead to a reduction in the quality of the products than to the long term reduction of the cost.
The separation of traceable and fixed cost is crucial when doing segmented reporting of costs. This is important, since traceable fixed costs are booked to departments while common fixed costs are pooled in the traditional costing system approach. The guidelines suggested for using the traditional approach is to use a broad, general guideline in determining which costs are traceable. This approach has obvious inherent inaccuracies.
The traditional costing systems only have one or a few indirect cost pools for each department or whole plant. The application of costs in the traditional costing system is normally based on an indirect cost driver and that the indirect cost applications are often financially based.
The traditional approach to costing of products fundamentally utilises a system whereby the total costs to produce a number of products are divided amongst the various products. By making use of the traditional costing system, it thus means that all the costs incurred have to be allocated to one or other product.
Activity Based Costing (ABC)
The underlying assumption of activity based costing is entirely different from that of conventional costing systems. The conventional costing system assumes that products cause costs. Activity based costing systems have activities as the fundamental cost objects. Activity based costing systems also assumes that activities cause costs and that cost objects create the demand for activities.
Activity based costing is a different approach and improves control of overheads by a cost/cause relationship, that are activity and cost. The system is flexible enough to relate costs to customers, processors, management responsibility and not just products.
As the name suggests, activity based costing is a system that focuses on activities as the basic cost objects and uses the costs of these activities as building blocks for compiling the costs of other cost objects. The use of an activity based costing system can also help a company to develop a way to analyse and justify manufacturing cycle-time improvements.
The use of activity based costing according evolved over the last few years from a more accurate method of product costing, to a more scientific method of cost reduction, to an all-embracing advanced planning, monitoring and control system, encompassing:
Activity based costing
Activity based cost management
Activity-based budgeting
Activity reporting
Performance measurement and benchmarking
Continuous improvement
Product/customer and sector profitability
Business process re-engineering.
It is therefore important to note that in activity based costing, costs are assigned to activities. The assignment is based on the consumption of resources utilised.
In utilising activity based costing, costs are collected for each activity as an independent cost object. These costs are then applied to commodities as they undergo the different activities. The final product cost is built up from the costs of the specific activities that each product line has undergone. In other words activity based costing assigns activity costs to cost objects based on activity drivers that accurately measures consumption of the activity.
When utilizing the activity based costing system managers attempt to assign the costs of significant activities to the products that causes those costs to be incurred. This results in activity based costing providing sufficient information to allow managers to know which activities cause the use of resources.
The most common approaches to activity based costing start with some kind of activity analysis, followed by activity based costing which is then used to create performance improvement ideas. Activity based costing is thus the tracking of activity costs to cost objects. These cost objects can be products, services, projects, customers or distribution channels.
When applied correctly activity based costing will diminish the issue of cost distortion by forming a cost pool for each activity that can be isolated as a cost driver.
Performance improvement techniques should also include cost driver analysis, activity grouping, performance evaluation and activity based costing. A cost driver is defined as the root cause or reason for an activity to occur. It is important to note that a cost driver should not be misinterpreted as an output measure. An output measure is a magnitude measure measuring how many outputs an activity produces. It is the output measure that should be followed to the cost object.
In an activity based costing system, overhead costs are assigned to a large number of cost pools that represent the most significant activities involved in the production process. It is also true that activity based costing systems utilises several indirect cost pools because of the many activity areas.
After allocating costs to the activity cost pools, cost drivers are identified that are suitable for each cost pool. Then the overhead costs are assigned from each activity cost pool to each production job in proportion to the amount of activity used up by the job. In other words, activity based costing assigns activity costs to cost objects based on activity drivers that accurately measures consumption of the activity.
The improved product costing accuracy in activity based costing comes from the identification of a large number of activity cost pools and the isolation of a suitable cost driver for each activity.
When using activity based costing the focal point is on resources and the activities that cause them. There should therefore no longer be a division between product and period costs as defined by financial accounting.
The importance of the correct activity classification is underlined in that activity classification should always include some kind of value-added / non value-added analysis and more importantly all staff involved in classifying activities should understand these definitions. The popular definition of a non-value added activity is anything that can be eliminated without detriment to the final product. Although activity classification is subjective, it is only a tool to help with performance improvement.
Conclusion
Whilst activity based costing is not a perfect science it does offer a sense of financial pragmatism to the wider management process. The initial premise that activity analysis can highlight waste (non-value adding) and bureaucracy (secondary or support activities), activity based techniques have been used for straightforward cost reduction, process improvement and re-engineering, benchmarking, performance measurement and a variety of related exercises including activity or priority based budgeting.
The three generations of activity based costing supplement and complement each other and one system should not be considered the replacement of either of the other two. The first generation focuses on product costing, the second generation on process costing or performance evaluation, and the third generation on value chain costing to be used in strategic analysis. All three use the same activities database; differences lie in types of linkage and the extent to which data on activities are to be gathered.
Activity based costing forces the manager to investigate fixed costs very closely. It therefore helps management to identify areas of inefficiency as well as recognise costs which we could have been conceived fixed but, which are in fact, variable or semi-variable to specific products.
这里有个详细的课程讲解： http://searchingfaster.com/p.php?q=aHR0cDovL21hYXcuaW5mby9DaGFwdGVyMi5odG0%3D
requirements, a company’s traditional cost-accounting
system is often articulated with its general ledger
system. In essence, this linkage is grounded in cost
allocation. Typically, costs are allocated for either valuation
purposes (i.e., financial statements for external
uses) or decision-making purposes (i.e., internal uses)
or both. However, in certain instances costs also are
allocated for cost-reimbursement purposes (e.g., hospitals
and defense contractors).
The traditional approach to cost-allocation consists
of three basic steps: accumulate costs within a
production or nonproduction department; allocate
nonproduction department costs to production departments;
and allocate the resulting (revised) production
department costs to various products, services, or customers.
Costs derived from this traditional allocation
approach suffer from several defects that can result in
distorted costs for decision-making purposes. For
example, the traditional approach allocates the cost of
idle capacity to products. Accordingly, such products
are charged for resources that they did not use.
Seeking to remedy such distortions, many companies
have adopted a different cost-allocation approach
called activity-based costing (ABC).
WHAT IS ACTIVITY-BASED COSTING?
In contrast to traditional cost-accounting systems,
ABC systems first accumulate overhead costs for each
organizational activity, and then assign the costs of the
activities to the products, services, or customers (cost
objects) causing that activity. As one might expect, the
most critical aspect of ABC is activity analysis.
Activity analysis is the processes of identifying appropriate
output measures of activities and resources (cost
drivers) and their effects on the costs of making a
product or providing a service. Significantly, as discussed
in the next section, activity analysis provides
the foundation for remedying the distortions inherent
in traditional cost-accounting systems.
TRADITIONAL COST-ACCOUNTING
SYSTEMS VERSUS ABC
Geared toward compliance with financial reporting
requirements, traditional cost-accounting systems
often allocate costs based on single-volume measures
such as direct-labor hours, direct-labor costs, or
machine hours. While using a single volume measure
as an overall cost driver seldom meets the cause-andeffect
criterion desired in cost allocation, it provides a
relatively cheap and convenient means of complying
with financial reporting requirements.
In contrast to traditional cost-accounting systems,
ABC systems are not inherently constrained by the
tenets of financial reporting requirements. Rather,
ABC systems have the inherent flexibility to provide
special reports to facilitate management decisions
regarding the costs of activities undertaken to design,
produce, sell, and deliver a company’s products or
services. At the heart of this flexibility is the fact that
ABC systems focus on accumulating costs via several key activities, whereas traditional cost allocation
focuses on accumulating costs via organizational
units. By focusing on specific activities, ABC systems
provide superior cost allocation information—especially
when costs are caused by non-volume-based
cost drivers. Even so, traditional cost-accounting systems
will continue to be used to satisfy conventional
financial reporting requirements. ABC systems will
continue to supplement, rather than replace, traditional
cost-accounting systems.
Activity-based costing (ABC) is a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each: it assigns more indirect costs (overhead) into direct costs.
In this way an organization can precisely estimate the cost of its individual products and services for the purposes of identifying and eliminating those which are unprofitable and lowering the prices of those which are overpriced.
In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services provided to its customers. It is generally used as a tool for understanding product and customer cost and profitability. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing and identification and measurement of process improvement initiatives.
Activity-Based Costing (ABC) arose in the 1980s from the increasing lack of relevance of traditional cost accounting methods. The traditional cost accounting methods were designed around 1870 - 1920 and in those days industry was labor intensive, there was no automation, the product variety was small and the overhead costs in companies were generally very low compared to today. However, from the 1960s - particularly 1980s - this changed rapidly. For these reasons, and more, traditional cost accounting has been called everything from 'number 1 enemy of production' and questions whether it is 'an asset or a liability' have been raised.
The question of course is whether ABC has overcome these deficiencies or not? It has. In fact, ABC has been called one of the most important management innovations the last hundred years.
So what is really the difference between ABC and traditional cost accounting methods? Despite the enormous difference in performance, there is three major differences:
In traditional cost accounting it is assumed that cost objects consume resources whereas in ABC it is assumed that cost objects consume activities.
Traditional cost accounting mostly utilizes volume related allocation bases while ABC uses drivers at various levels.
Traditional cost accounting is structure-oriented whereas ABC is process-oriented.
This is discussed in more detail in the subsequent sections and illustrated below.
But first, the direction of the arrows are different because ABC brings detailed information from the processes up to assess costs and manage capacity on many levels whereas traditional cost accounting methods simply allocate costs, or capacity to be correct, down onto the cost objects without considering any 'cause and effect' relations.
Consumption of resources versus consumption of activities
ABC acknowledges that you cannot manage costs, you can only managed what is being done and then costs will change as a consequence. In traditional cost accounting, however, the underlying assumption is that costs 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 when it comes to improving productivity. By investigating systematically what is being 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 be 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 same 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. Because the drivers are related to the actual processes, they occur on several levels. The four most common levels are;
Unit level. Unit level drivers are triggered for every unit that is being produced. For example, for a man and a machine that produces one unit at a time, the associated direct labor will be a unit level cost driver. This is therefore a volume related driver similar to the traditional allocation bases.
Batch level. Batch level drivers are triggered for every batch produced. A good example of that is production planning, because the planning is done for each and every batch regardless of the size of the batch. Here, number of batches can be a good driver.
Product level. Product level drivers are triggered for every product regardless of the number of units and batches produced. These drivers occur by the sole existence of a product. A good example of a driver is the number of product development hours per product so that the more product development hours a product triggers, the more product development costs should be assigned to that product.
Costing systems are information systems. They require a specific type of information such as direct labour hours and units produced, to be of value. It is from the input data that product costs and other information are determined according to the specific costing system defined methodology. The results obtained would depend on the costing system used, since the same input data could be used in different ways. In this case the traditional costing system or an activity based costing system.
A costing system should provide information to help minimise waste, but should not be wasteful in itself. In other words, the resources required to design, implement and maintain a costing system should be less than the benefit derived from the use of the system.
In order to compare the two systems it is necessary to understand the working of both system.
The Traditional Costing System
It is a well-known fact that the traditional costing systems utilise a single, volume-based cost driver. This is the reason why the traditional product costing system distorts the cost of products. In most cases this type of costing system assigns the overhead costs to products on the basis of their relative usage of direct labour. For this reason traditional cost systems often report inaccurate product costs.
The problem is in the underlying methodology of the traditional costing systems. They adhere to the assumption that products cause cost. Each time a unit of product is manufactured, it is assumed that cost is incurred. This assumption makes sense for certain direct costs. The assumption does not work for activities that are not performed directly on the product units.
The problem with this approach is that for most overhead activities, the proportions of the activity actually consumed by a specific product, does not universally correspond with a single cost driver. This holds true for most modern companies where products are produced by a combination of manpower and technology. The traditional cost accounting model employs a volume-based driver, such as direct labour hours or machine hours for the assignment of all manufacturing overhead costs. The conventional cost accounting model ends up with a cost of goods sold based on absorption costing and includes only product costs as defined in financial accounting.
Fundamentally, traditional costing systems try to assign cost directly to products, rather than to activities first and then from the activities to product units. The typical cost report gives information on what is spent, but not why it is spent.
When overhead costs are cut in order to reduce total costs it is the symptoms that are treated and not the cause. In many cases the cutting of overheads is more likely to lead to a reduction in the quality of the products than to the long term reduction of the cost.
The separation of traceable and fixed cost is crucial when doing segmented reporting of costs. This is important, since traceable fixed costs are booked to departments while common fixed costs are pooled in the traditional costing system approach. The guidelines suggested for using the traditional approach is to use a broad, general guideline in determining which costs are traceable. This approach has obvious inherent inaccuracies.
The traditional costing systems only have one or a few indirect cost pools for each department or whole plant. The application of costs in the traditional costing system is normally based on an indirect cost driver and that the indirect cost applications are often financially based.
The traditional approach to costing of products fundamentally utilises a system whereby the total costs to produce a number of products are divided amongst the various products. By making use of the traditional costing system, it thus means that all the costs incurred have to be allocated to one or other product.
Activity Based Costing (ABC)
The underlying assumption of activity based costing is entirely different from that of conventional costing systems. The conventional costing system assumes that products cause costs. Activity based costing systems have activities as the fundamental cost objects. Activity based costing systems also assumes that activities cause costs and that cost objects create the demand for activities.
Activity based costing is a different approach and improves control of overheads by a cost/cause relationship, that are activity and cost. The system is flexible enough to relate costs to customers, processors, management responsibility and not just products.
As the name suggests, activity based costing is a system that focuses on activities as the basic cost objects and uses the costs of these activities as building blocks for compiling the costs of other cost objects. The use of an activity based costing system can also help a company to develop a way to analyse and justify manufacturing cycle-time improvements.
The use of activity based costing according evolved over the last few years from a more accurate method of product costing, to a more scientific method of cost reduction, to an all-embracing advanced planning, monitoring and control system, encompassing:
Activity based costing
Activity based cost management
Activity-based budgeting
Activity reporting
Performance measurement and benchmarking
Continuous improvement
Product/customer and sector profitability
Business process re-engineering.
It is therefore important to note that in activity based costing, costs are assigned to activities. The assignment is based on the consumption of resources utilised.
In utilising activity based costing, costs are collected for each activity as an independent cost object. These costs are then applied to commodities as they undergo the different activities. The final product cost is built up from the costs of the specific activities that each product line has undergone. In other words activity based costing assigns activity costs to cost objects based on activity drivers that accurately measures consumption of the activity.
When utilizing the activity based costing system managers attempt to assign the costs of significant activities to the products that causes those costs to be incurred. This results in activity based costing providing sufficient information to allow managers to know which activities cause the use of resources.
The most common approaches to activity based costing start with some kind of activity analysis, followed by activity based costing which is then used to create performance improvement ideas. Activity based costing is thus the tracking of activity costs to cost objects. These cost objects can be products, services, projects, customers or distribution channels.
When applied correctly activity based costing will diminish the issue of cost distortion by forming a cost pool for each activity that can be isolated as a cost driver.
Performance improvement techniques should also include cost driver analysis, activity grouping, performance evaluation and activity based costing. A cost driver is defined as the root cause or reason for an activity to occur. It is important to note that a cost driver should not be misinterpreted as an output measure. An output measure is a magnitude measure measuring how many outputs an activity produces. It is the output measure that should be followed to the cost object.
In an activity based costing system, overhead costs are assigned to a large number of cost pools that represent the most significant activities involved in the production process. It is also true that activity based costing systems utilises several indirect cost pools because of the many activity areas.
After allocating costs to the activity cost pools, cost drivers are identified that are suitable for each cost pool. Then the overhead costs are assigned from each activity cost pool to each production job in proportion to the amount of activity used up by the job. In other words, activity based costing assigns activity costs to cost objects based on activity drivers that accurately measures consumption of the activity.
The improved product costing accuracy in activity based costing comes from the identification of a large number of activity cost pools and the isolation of a suitable cost driver for each activity.
When using activity based costing the focal point is on resources and the activities that cause them. There should therefore no longer be a division between product and period costs as defined by financial accounting.
The importance of the correct activity classification is underlined in that activity classification should always include some kind of value-added / non value-added analysis and more importantly all staff involved in classifying activities should understand these definitions. The popular definition of a non-value added activity is anything that can be eliminated without detriment to the final product. Although activity classification is subjective, it is only a tool to help with performance improvement.
Conclusion
Whilst activity based costing is not a perfect science it does offer a sense of financial pragmatism to the wider management process. The initial premise that activity analysis can highlight waste (non-value adding) and bureaucracy (secondary or support activities), activity based techniques have been used for straightforward cost reduction, process improvement and re-engineering, benchmarking, performance measurement and a variety of related exercises including activity or priority based budgeting.
The three generations of activity based costing supplement and complement each other and one system should not be considered the replacement of either of the other two. The first generation focuses on product costing, the second generation on process costing or performance evaluation, and the third generation on value chain costing to be used in strategic analysis. All three use the same activities database; differences lie in types of linkage and the extent to which data on activities are to be gathered.
Activity based costing forces the manager to investigate fixed costs very closely. It therefore helps management to identify areas of inefficiency as well as recognise costs which we could have been conceived fixed but, which are in fact, variable or semi-variable to specific products.
这里有个详细的课程讲解： http://searchingfaster.com/p.php?q=aHR0cDovL21hYXcuaW5mby9DaGFwdGVyMi5odG0%3D
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解释传统与现代成本会计法，那一种方法更好，并给出原因。
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解释「传统核算法」与「作业成本法核算法」,那一种方法较好,试举出理由
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