Traditional Cost Accounting vs. Activity Based Costing Essay by JPWrite

Traditional Cost Accounting vs. Activity Based Costing
This paper examines the pros and cons of two specific cost accounting systems: Traditional cost accounting (TCA) and activity based costing (ABC).
# 65559 | 1,725 words | 9 sources | MLA | 2006 | US
Published on May 13, 2006 in Business (General) , Accounting (General)

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The writer of this paper stresses that the purpose of any cost accounting system is to provide current information about the total cost of manufacturing a product or performing a service. This paper analyzes in detail the strengths and weaknesses of traditional cost accounting (TCA) and activity base costing (ABC). TCA is a well developed method of estimating cost incurred while the ABC system is based on costs which are driven by factors other than product volume.

From the Paper:

"A problem may arise in the use of actual overhead costs. The problem stems from the fact that many of the elements of manufacturing are fixed costs, rather than variable costs. Fixed costs are those that tend to remain relatively constant from month to month. Examples of fixed overhead costs include the monthly salary paid to plant managers, depreciation, property taxes, and insurance on plant assets."

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Traditional Cost Accounting vs. Activity Based Costing (2006, May 13) Retrieved May 28, 2023, from

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"Traditional Cost Accounting vs. Activity Based Costing" 13 May 2006. Web. 28 May. 2023. <>