Managment accounting Essay Example | Topics and Well Written Essays - 1000 words

Managment accounting - Essay ExampleThe profit should be high than the speak to of production.There is increased desire by companies to know the behaviour of factors that drive to distinct cost .In increasingly competitive business environment organizations seeking to maintain or improve their competitiveness take up cost information that is relevant and accurate. This system is based on cost modelling that traces an organization expenses two direct and indirect (Thukaram, 2007, p. 171). The activity based costing is fashionable because it has the advantage of advanced technology to the focusing of an organization.Hence organizations are automating what previously had been manual jobs. The primary reason for the shift is also due to the different channels of distributing the variety of products and operate, in addition the organization has been servicing different types of customers (Nolan, 2004, p. 17).Hence sufficient information foundation be obtained to make decisions abo ut the favorableness of different product lines. It also helps the organizations provide value added services or top-ups to existing products on actual cost incurred basis thus creating efficiency.The introduction of this greater genetic mutation and diversity creates complexity and increasing complexity results in greater budget items expenses. The fact that this expense overhead in recurring the labour expense does not mean that the organization is becoming inefficient, is means that the political party is offering variety to different customers (Humphrey, 2007, p. 100).It traces indirect cost also called overhead to products, customers and services by identifying imagination and their cost, the consumption of this resources by activities and performance of activities to produce output. Thus eliminating unprofitable items from the product line, thereby increasing profitability without increasing prices, a