ABC accounting versus Traditional Accounting Research Paper

ABC accounting versus Traditional Accounting - Research Paper Example Usually, an organization will fund a particular activity, which helps in monitoring the use of other resources, and assess the outcome. Companies that adopt this technique are able to estimate a particular cost-element of the whole batch of products, services and activities. This way, the company finds it easier to make a decision on the identifying products or services, which are less important. Additionally, any service that tends to overpriced is normally reduced to the right pricing. Further, a company can do away with any processing of goods if the process used proves to be unprofitable. In short, the ABC method helps a company in the assigning cost of resources in the activities to help in delivery of products to its clients (Brown & Tower, 2010). As a result, companies are able to decide on the pricing of goods, their identification, outsourcing as well improve non-effective processes. History Whereas George Staubus is the man that ABC is based on, this concept was first initiated in the US in the 70s. In the late 80s, Robert Kaplan and robin Cooper popularized the term when they both compared the traditional method of accounting with the ABC. In their conclusion, they felt that ABC was more effective than the traditional one. Moreover, it was established that ABC is able to locate the exact cost that a company will spend and not just the main expense.