What is the connection between activities based on activities and management -based management?
activities based on activities concern the method of assigning the production costs to the correct source, unlike the general assignment of costs in the same way to different resources during the production process. The relationship between the costs based on the activities and the management of activity is derived from the fact that proceedings based on activities can be influenced by information derived during the analysis of the cost -based cost process. In order to understand the connection between activities based on activities and management based on activities, it is necessary to understand what two accounting conditions mean.
Usually, when manufacturers are trying to add the cost of producing different items in the product line of manufacturers, they do this by looking at the volume of the production process for a particular item without considering other factors that could render Thje inaccurate statistics. For example, calculating the product's production costs A and Product B from the same SPOLine can be used to illustrate the concepts of cost -based costs and activities based on activities. Assuming that the manufacturer already knows that directly assignable costs arise from Product A and Product B, but still trying to find overhead costs for the production of both items, this process will require the use of activities based on the correct conclusion. In this case, the overhead cost of product production and product B could include overhead costs, such as the inspection of raw materials before the production and the use of a predetermined number of employees within the production process.
where the product process for the product and uses fewer inputs from factory staff due to the nature of the product, even if workers are available for the production process, this will serve as a factor in calculating activities based on activities. If product B uses all factory hands during the production process, even if the volume of generated ME products isIt will also be reflected in the calculation of activity -based cost as a contributing factor, making product B more expensive. The connection between the costs of activities based and the activities based on activities is related to the way that this information can be used to better manage the production process for greater cost efficiency.