The Advantages and Disadvantages of Activity Based Costing over Traditional Costing

The paper is purposed to compare Activity Based Costing (ABC) with Traditional Costing. There will be added the advantages and disadvantages of each respective methods. Journal from respectable sources are compared in this paper in order to provide the readers with comprehensive comparison between both methods. Based on the findings, it is concluded that ABC are more advantageous than Traditional Costing. Considering the positive and negative results from both traditional costing and ABC, it is important to know about both costing system for a firm to obtain the desired result. Some companies might be better off implementing traditional costing, while some others might generate better performance with activity based costing. Therefore, this study is aimed to elaborate further into the case which ABC and traditional costing have positive effects on the firms, so that the firms can maximize their profits by implementing the costing system that suits them at best. The paper is purposed to compare Activity Based Costing (ABC) with Traditional Costing. There will be added the advantages and disadvantages of each respective methods. Journal from respectable sources are compared in this paper in order to provide the readers with comprehensive comparison between both methods. Based on the findings, it is concluded that ABC are more advantageous than Traditional Costing. Considering the positive and negative results from both traditional costing and ABC, it is important to know about both costing system for a firm to obtain the desired result. Some companies might be better off implementing traditional costing, while some others might generate better performance with activity based costing. Therefore, this study is aimed to elaborate further into the case which ABC and traditional costing have positive effects on the firms, so that the firms can maximize their profits by implementing the costing system that suits them at best.