Activity Based Costing
SUBJECT : Management
PUBLISHED ON : 02/04/18
NUMBER OF PAGES : ( 44 Pages)
PRICE : Rs 28.6

The main objective of any costing system is to determine scienti􀃀 cally the cost of a product or service. For facilitating the calculation, costs are divided into direct and indirect. Direct costs are the costs which are traceable to the products/services offered. On the other hand, indirect costs which are also called as ‘overheads’ are not traceable to the products/ services. Hence these costs are 􀃀 rst identi􀃀 ed, classi􀃀 ed, allocated, apportioned, wherever allocation is not possible, reapportioned and 􀃀 nally absorbed in the products/services. Charging the direct costs to the products is comparatively a simple procedure and can be done with remarkable accuracy. However, the indirect costs present problems in charging them to the products and there is a possibility of distortion of costs though the basis of charging them is quite logical.