Cost Accounting. A managerial emphasis Essay Example | Topics and Well Written Essays - 500 words

Cost Accounting. A managerial emphasis - Essay Example This in turn drive up fixed costs due to imperfect factor substitution as managers turn to other less efficient activities or resources to substitute the activity that is used as the cost driver. The fixed cost is in turn costed over a lower level of activity, making the activity seem costly when in fact it might be a lucrative market or product (Doogar, 2001). Q12. In activity based management, cost driver analysis, cause-and-effect diagram, pareto analysis, and performance measurement are performed. Activity based analysis examines, quantifies, and explains the effects of the cost driver on the cost of an activity. Cause-and-effect diagram maps out causes that affect an activity, process, stated problem, or outcome. In pareto analysis, histogram of cost drivers that contribute to the total cost is constructed. Performance measurement identifies the work performed and the results achieved by an activity process or organizational unit (Porter, 2006). Q13. Andrew Carnegie installed weigh scales at all points in his mills to see whether material was saved or not. Rather than checking quality after the products have been produced, Edward Deming's ideas of Total Quality Management propounded a cease in dependence on mass inspections-quality must be designed and built into the processes, preventing defects rather than attempting to detect and fix them after they have occurred.