Advanced Managerial Accounting Report - Essay Example

Advanced Managerial Accounting Report Financial accounting s actual figures in transactions where Managers are able to analyze this information so as to improve the performance in their businesses before implementation takes place. This paper seeks to compare and contrast Activity- Based Costing (ABC) and conventional accounting so as to finally come up with the major findings related to these cost systems. Effectiveness of ABC is based on the systematic analysis of most of the costs in the company.

It is accompanied by strict and complex procedures, which are time consuming and costly, and as such difficult and to implement and maintain. Most Managers inquire before implementing any of these cost systems where ABC is given a first priority due to its production costs that are considered higher to those of conventional banking (Weygandt, Kimmel, and Kieso 56). ABC is a contrast of conventional banking since it helped patients in their treatment when it came to hospitals. Conventional accounting is a simple method for managing costs compared to ABC.

However, it is not accurate and most of the time is accompanied by under-costing and also over-costing. ABC is able to capture changes through direct measurement of activity levels thus adjusting from distortions that arise in the conventional cost system (Weygandt 45). However, there exists a similarity among these two cost systems where provision of costs similar to those of ABC can be structured by conventional accounting. In conclusion, both cost systems; ABC and conventional accounting have their place of application and duration of time matters.

They all are implemented differently but all of these systems of accounting have a purpose in any business despite of different strengths and weaknesses. ABC works best for most businesses compared to conventional accounting.