Page 22 - MA - May 2017
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COVER STORY







          ACTIVITY BASED




          METHOD FOR PURELY




          FINANCIAL




          ITEMS








        T













                                                         adoption of  various tools
                            he estimation of the cost of product or

          service yields innumerable benefits, as it facilitates to  and techniques will finally
          improve the efficiency and economy of the operations  result in to get the goods and
          of the entity. The identification and removal of the   services at the acceptable lower price and
          ineptitude activities will enable to identify and remove  thus facilitate to improve the general standard of living
          the unprofitable products or services by applying the  of the general public.
          various doctrines of costing. The inappropriate costing   There are many techniques to determining the cost of
          of products or services may lead to erroneous fixation of   the product as well as services. At the time of evolution of
          price and result in fall in demand and consequent loss to  costing, cost of commodities or services was determined
          the entity.                                    by summing up of  materials, labor and overheads
           The techniques of costing assists management to   incurred.  During  those  times  the  apportionment
          formulate proper planning and control of  various   of   overheads  was  made  with  reference  to  labor
          scare resources and also to take various decisions   hours or materials consumed, which was decided by
                            such as make or buy, dispose   management. Robert Kaplan invented a new technique
                            or retain, expand or shrink etc   Activity Based Costing, which created a big bang among
                            at the appropriate time.  The   Industries. It shows a new spectrum of  costing of



                              CMA Dr. L. Kailasam
                              Deputy Accountant General
                              Office of Principal Accountant General
                              Thiruvanathapuram




          22   The Management Accountant  l   May 2017                                   www.icmai.in
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