BA 3340 Lecture Notes - Lecture 17: Resource Consumption, Profit Margin, Cost Driver
Document Summary
Adv: more accurate cost information = continuous improvement, better estimates of resources in budgets, increased accuracy of cost information it provides for day-to-day decision making, better control through identification of costs, suitable for businesses with diverse products. Dis: high measurement costs due to accurate info, time consuming with multiple cost drivers, implementation costs may exceed the benefit of accurate data. Plantwide rather than abc: abc is more costly to implement, companies making only one product or multiple products in the same way don"t need it, if overhead is a small proportion of your total product cost don"t need it. Abc rather than plantwide: cost distortions, non-unit level costs, higher percentage of overhead, diverse products. Fsa: applying analytical tools to a company"s financial statements to understand the company"s financial health and requires: Helps investors, creditors, employees and managers better understand the financial performance/position and make better decisions.
