Page 160 - (DK) The Business Book
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ASSIGN COSTS
ACCORDING TO
THE RESOURCES
CONSUMED
ACTIVITY-BASED COSTING
ost accounting seeks to (such as utilities). According to
IN CONTEXT determine a company’s Professor David Myddelton of
C costs of production by Cranfield School of Management
FOCUS
measuring direct costs (such in the UK, the inherent inaccuracy
Costs and efficiency
as raw materials) and adding an of this method often means that
KEY DATES estimate of overhead or fixed costs companies know far less than they
1911 F. W. Taylor—one of the
first management “gurus”—
writes The Principles of
Scientific Management. In Activity-based accounting calculates the
it, he suggests methods for actual overhead cost of products and services.
creating an accurate
costing model.
1971 US professor George
Staubus writes Activity
Costing and Input-Output
These are exact, so the company is able
Accounting. His book to calculate accurate unit costs.
encourages interest
in activity-based costing
among US manufacturers.
1987 US business experts
Robert Kaplan and Robin
This accuracy allows the company to make good
Cooper define activity-based
decisions about how best to use resources.
costing in their book,
Accounting and Management.
Assign costs according to
the resources consumed.
