You are the management accountant for Runmoe Springs Ltd, a company that manufactures suspension components for the
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It's always the same. We pay a fortune to attend these courses. The consultants peddle their wares, and no matter what the new gimmick is, they tell us that our business is likely to fail without it. They used to talk about using ABC to improve our product costing. Now they talk about using ABM to improve our control. They see activity-based management as a cure for all ills. I don't understand why we need a new costing system or how activity-based costing works.
Even the terminology has got me beaten. What's the difference between activity-based costing and activity-based management? What are these things called activity attributes, root cause cost drivers, non-value-added activities, activity performance measures and processes? How could i use them to improve control at Runmoe?
Required
Write a clear and concise report to Runmoe's managing director, explaining
1. Potential problems with Runmoe's existing system for control.
2. Key features of the two-dimensional activity-based costing model
3. Difference between activity-based costing and activity-based management.
4. How ABM could be used to improve Runmoe's control
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Related Book For
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton
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