On Saturday, November 20, 2021, an online guest lecture was held with the topic "Recent Trends in Activity Based Costing". This guest lecture invited guest speaker Dr. Sandeep Kumar Kesarwani from Gopal Narayan Singh University Bihar India. This guest lecture was attended by approximately 150 undergraduate students taking Cost Accounting and Management Accounting classes.
Dr. Sandeep opened the presentation by discussing the definition of Activity Based Costing (ABC). ABC is a costing system which focuses on activities that done to produce a product or in other words, costs are first traced to activities and then to products. ABC is generally used as a tool to understand the product and customer costs and profitability. As global competition intensifies, companies produce a wide variety of products and services. They found that producing different products and services place various demands on their resources. until kthe need to measure more accurately These increasingly diverse products and services have caused companies to such as American Express, Boeing, General Motors, and Exxon Mobil to improve their costing system. one of the main way companies around the world improve costing system is through activity based costing or ABC.
After explaining the definition of ABC, Dr. Sandeep then explained about the evolution of the ABC concept which originally came from a traditional system or what is often referred to as Traditional Based Costing. He then went on to explain the difference between traditional costing and ABC. If you focus on the costs incurred, Traditional costing fails to capture the causes and effect relationship. Traditional accounting is limited to provide information at the product level. Whereas Today's manufacturing technology demands feedback from performance while production is still in progress. Therefore, the ABC system is used to overcome these shortcomings. In addition to the material presentation, Dr. Sandeep also provides case studies on ABC calculation.
