Traditional Methods and Activity Based Costing

TUI UNIVERSITY

AMBER L. MUNIZ

ACC 501

MODULE 5, CASE ASSIGNMENT

DR. M. AUSTIN ZEKERI

Traditional methods and activity based costing call into question what type of decisions are necessary for a manager to make the best possible decisions for their company. The type of costing method you choose can have very significant impact on the inputs and hours involved in leading up to those decisions but it can also better assist you in making the right decisions. By looking at the difference between activity based costing and the more traditional methods, pros and cons, and why it is important for each business/organization to decide the best method for themselves, the case should explain what is most important and what works most effectively.

Those who are not familiar with the agriculture industry often are confused by or judge farmers as backward thinkers or uneducated. They judge them, as they do country music -the one tune about the woman, the dogs, or jail. However, in reality, this is not the case for most of the farming industry. There are many who know farmers, or owners who chose to lease the land to co-op farmers that use every technology advances they could afford to get the crops to produce better yields. And even though prices continue to reduce, making it slimmer chances for the family farms to survive in the future, they are always new and more efficient ways to produce the crops. The accounting practices found within the farm financial standards council, the case focus, could be significantly advantageous to the industry to bring them up-to-date along with their technology-ridden, forward-thinking daily operations.[1]

The major advantage to utilizing tools, like Activity Based Costing, would be the added benefit of being closer to “true cost”. True cost economics, being an economic model that seeks to include the cost of negative externalities into the pricing of goods and services.[2] If the...