Impact of traditional and ABC cost allocation on decision making Research Paper

Impact of traditional and ABC cost allocation on end making - Research Paper ExampleThe cost of direct materials and direct labors are easy to trace to products. However, allocating indirect overhead costs are very(prenominal) complicated and not easily traced to products. Such indirect costs require predetermined overhead rates to be allocated. In this study, I will heighten on the impact of traditional and activity-based cost allocations on decision makers.Decision-making is a function preceded by a series of information gathering and analysis. The contrast environs is becoming more dynamic and volatile not to mention the ever increasing competition. Companies operate under the famous accounting concept (the going concern), which implies that the business operations should continue indefinitely. However, the life span of a business and more importantly, the performance are heavily influenced by the decisions made. Therefore, decision-making is a critical function in the organi zation. The managerial accounting is the organizations department charged with the responsibility of providing the necessary information for decision-making. Consequently, the management accountants role is significant in the organization (Kaye, 1988 pp. 1-5).Managerial accounting includes the following activities data distinguishing proof, measuring, information examination, and correspondence. The transmission of the data is important to upgrade educated choice making to encourage the attainment of the associations targets (Sawsan and Mostafa, 2012 pp. 1-5). It is the commitment of the administration bookkeeper to guarantee the usage of the procedure specified previously. The role of the administration bookkeeping and the administration bookkeeper are to plan, organize, control, direct, communicate and motivate. To start with, Planning is the inborn capacity of the administration by a method for which the supervisors choose the objectives to be fulfilled and the course of activi ties to convey the objectives (Sawsan and Mostafa, 2012