Question

the in value service of activity industries Comment on bare costing lo moko)

Answer 1

Solution:

Activity costing is a part of cost management. It involves reducing and managing the cost as well as maintaining the quality of products. ABC looks at the whole cost of a single product or service as opposed to looking at the cost of entire department.

ABC can be applied in a service industry by investigating the cost of different services. ABC makes the right assumptions, so in a service industry it ensures provisions of information about costs of activities and services for decision making and cost control. Because of competitive environment managers of service industry requires more and more information to improve the quality, timeliness and efficiency of the activities they perform, and to increase the accuracy of measurement of costs and profitability of individual services.

It improves overall cost accounting systems. It separates variable and fixed cost. It identifies factors that drive costs, the ways these factors can be controlled, and redefines departments as profit or cost centers.

In Hospital following information is they needed to manage effectively:

Accurate allocation of administrative costs to products.
A comparison of costs and their causes over time.
Information regarding the cost of various activities.

All of this information can be available from an ABC system.