Question

What type of cost accounting system would be best suited for a company like Apple, INC.

Answer 1

Apple, INC. is a very large company which provides various products like IPhones, tablets, Macbooks, etc. and services like cloud services, software services, online store services, marketing services, etc.

Due to these vast area of products, services and processes, there is involvement of numerous machines, finished merchandise as well as interlinked processes which adds to its complexity. This makes the company’s environment, systems and management very complex.

Because of such complexity, it is very difficult to maintain accounts and cost accuracy by traditional cost accounting system.

That is why activity based accounting system suited. Because it helps in maintaining the accuracy in costing process. Overhead costs will be assigned to products or services as per the need and usage of activity. In this way, it can eliminate the allocation of irrelevant cost to products and services. This makes easy for management to have control over segments, not performing well.