英语论文网

while Clifton profit is negative when managers use Activity Based Costing. It proves that Full Costing is less accurate than Activity Based Costing. Full costing centers on product with attention drawn to product-related quality and it fails to explain the reasons for cost increases or decreases while it only provides quantity fluctuation(Armstrong, 2001). In York Ltd. Managers deduce that Ouse and Lendal produce more profit than Clifton but they can not find reasons why Clifton produces less profit and how to improve it. As manufacturing costs are allocated on the basis of direct labor hours ,product costs in high yield are overestimated while profit levels are underestimated; on the contrary, production costs in low yield are underestimated with its profit overestimated, which is not conductive to gain a correct understanding and positioning of the product prices so as not to facilitate the adjustment of product structure and product pricing strategy . For example , Ouse profits is underestimated only 270000 in 9000 volume, but its overheads is 1800000, the most one in three products. Lendal profit is 300000 in 3000 volume and Clifton profit is 67500 in 1500 volume. Also it is complicated and arduous because Full Costing requires collection and distribution of complex manufacturing costs across multiple products on basis of direct labor hours while product costs are affected by varied factors besides direct labor hours, which leads to human factor overwhelms and the objective reality can not be accurately reflected .

In order to reduce errors, new accounting management should be introduced. Just as what said in the conference the Finance Director recently attended Activity Based Costing provides better management information , for example, more precise cost information because it focuses on the overhead costs with multi-dimensional assignment rather than sole standard, which is conductive to accurate allocation of overhead and Activity Based Costing assigns indirect and support costs to activities that are performed by organizations(Kaplan &Anderson, 2005). In York Ltd. There are five kinds of overhead costs drive: setting up, machine related , receiving hours, packing and engineering. The whole cost is allocated to those activities with every one has its only drive rate. The overhead cost for machine hours of Ouse is ￡ 68000 and  Lendal  ￡51000 and Clifton ￡170000. Managers can conclude from Activity Based Costing that for Ouse, Lendal and Clifton machine related costs account for large percentage of the whole cost . That is the reason why total cost is high and managers have to curtail machine cost. Also Ouse spends ￡234000 on packing as the most expenditure in the whole cost. Lendal spends ￡150000 on engineering as the most expenditure in the whole cost and Clifton 375000on engineering as well. According to this, it is easy to find reasons for high cost of every product . Additionally it provides more real and abundant activity-driven measurement information to help managers make better design and product pricing decisions. Managers ought to reset the Clifton selling price because it is non-profit. Meanwhile market competitiveness of products is improved due to Activity Based Costing’s attention on commodity design, research and development and quality management in accommodation with the unification of technology and economy. High machine related cost compels managers to develop technology本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。