what managerial accounting technique attempts to allocate manufacturing overhead in a more meaningful fashion?
activity based costing
The managerial accounting technique that attempts to allocate manufacturing overhead in a more meaningful fashion is Activity-Based Costing (ABC).
ABC is a cost allocation method that identifies the activities that consume resources in a company’s operations, such as setup, machine use, or maintenance, and then allocate costs to products or services based on the activity consumption. It helps to identify the true cost of each product or service offered by the company by tracing each overhead cost accurately to the activity that causes it.
By using ABC, the company can obtain a better understanding of where costs are incurred and can make more informed decisions on pricing, product mix, and profitability. The traditional method of allocating overhead costs based on direct labor or machine hours could result in inaccurate cost allocation leading to poor decision-making and ultimately loss of profits.
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