Activity Based Costing at IT Service Desk

IntroductionThe get of ABC is to address the first two questions at issue which deals with clarifying the cost structure of the Service Desk. The mark of ITIL is to assist with the descriptions of the organizational functions and processes that occur within an IT Service Desk environment. constituted CostingTraditional cost placements ar often associated with financial accounting counsel and include direct materials, direct labour, and manufacturing overhead in their lineament of product cost. For simplicity, we will assume here that overhead is allocated to individualistic products using a plant-wide overhead rate, although different companies may tenability various departmental overhead rates. There is no contributing(prenominal) relationship between the way in which overhead is allocated and the veritable(a) production process. Rather, overhead is allocated based on the number of units produced or the number of labour or machine hours used in production. (Hughes & adenine; Paulson, 2003 :23)Traditional cost accounting methods suffer from several defects that commode result in distorted costs for decision readiness purposes. (Garrison, Noreen & amp; Brewer,2006: 339)All manufacturing costs ?even those that argon not caused by any specific product ? are allocated to products. And nonmanufacturing costs that are caused by products are not assigned to products. Traditional methods as well as allocate the costs of idle capacity to products (Garrison, Noreen & Brewer,2006: 339). Critics of tralatitious costing claim that this approach overcosts simple products produced in ample batches and under costs more complex products produced in petty(a) batches. These cost issues result from the averaging nature of traditional cost frame overhead allocation. (Hughes & Paulson, 2003 :23). The traditional system is easy and brassy to implement, but the information obtained could be too raw to be analyzed. ABC solves that problem but is expensive and time-consuming (Abdallah &! Li, 2008: 12). (Kaplin, Robert & Cooper, 1997: 83)Activity Based CostingActivity-based... If you want to get a shell essay, order it on our website: OrderEssay.net

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