Running head: ABC Systems: Are they Advantageous
ABC Systems: Are they Advantageous
Jamie Parson
Liberty University

Abstract
Activity based cost accounting provides companies with detailed and pertinent information that enables them to accurately cost the manufacturing products. Although it is at time confusing the use of an ABC system allows managers the details they need to make educated decisions about production and costs. The use of the ABC system is not always the most popular way for companies to go, but is it worth it?

ABC Systems: Worth the Work?
Activity Based Costing or as it is more commonly labeled “ABC” is a costing system that firsts assigns cost to activities and then assigns them to product based activities used towards that product. Costs are assigned to activities in a detailed manor so that detailed costs per activity are available. Once costs are assigned to activities they are than assigned to products based on the products use of that resource. ABC techniques allow businesses to decide which products, services, and resources are increasing their profitability, by providing more detailed information to management. The implementation of an ABC costing method it not right for all corporations; however for the corporations that fit the model for an ABC system, managers are more educated to make informed decisions about the true cost of a product. The use of this system allows more accurate and cost effective: pricing, costing, process improvements, product design, and manufacturing. Although the ABC method of costing has decreased over the last decade it still does have its purpose and can be very helpful to many corporations by providing detailed accurate information for costing purposes. “ABC has stagnated over the last five to seven years.” (Kaplan)
Since overhead costs are a large portion of the costs associated with a