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 subprogram of ITIL is to assist with the descriptions of the organizational functions and processes that occur within an IT Service Desk environment. stately CostingTraditional cost placements ar often associated with financial accounting hash out and include direct materials, direct labour, and manufacturing overhead in their procedure of product cost. For simplicity, we will assume here that overhead is allocated to laissez-faire(a) products using a plant-wide overhead rate, although different companies may resolve various departmental overhead rates. There is no sternutatory relationship between the way in which overhead is allocated and the authoritative 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 trough result in distorted costs for decision skill purposes. (Garrison, Noreen & adenosine monophosphate; 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 overly allocate the costs of idle capacity to products (Garrison, Noreen & Brewer,2006: 339).

Critics of pass on costing claim that this approach overcosts simple products produced in plentiful batches and under costs more complex products produced in low -spirited batches. These cost issues result ! from the averaging nature of traditional cost administration overhead allocation. (Hughes & Paulson, 2003 :23). The traditional system is easy and meretricious 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 flitter essay, order it on our website: OrderEssay.net

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