Question

Discuss two potential uses of the 2 australian companies which uses activity based costing for decision-making, to the managers in each of the 2 organisations ?

Answer 1

Solution:- 1) activity based costing acknowledges that some cost vary with unit produced and some cost do not. activity-based costing provides a more accurate determination of cost because it separately identifies and traces non -unit base cost to products rather than combining them in a pool of fixed cost . So it helps in allocations of cost or determination of separate cost.

2). By using Activity based costing manager make product decisions by estimating the expected profitability of organisation.