Activity Based Costing vs. Traditional Costing

This video discusses the key differences between Activity Based Costing and traditional costing systems in the context of managerial accounting.
-
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
-
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* eepurl.com/dIaa5z
-
SUPPORT EDSPIRA ON PATREON
* / prof_mclaughlin
-
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* edspira.thinki...
-
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: podcasts.apple...
* Spotify: open.spotify.c...
* Website: www.edspira.co...
-
GET TAX TIPS ON TIKTOK
* / prof_mclaughlin
-
ACCESS INDEX OF VIDEOS
* www.edspira.co...
-
CONNECT WITH EDSPIRA
* Facebook: / edspira
* Instagram: / edspiradotcom
* LinkedIn: / edspira
-
CONNECT WITH MICHAEL
* Twitter: / prof_mclaughlin
* LinkedIn: / prof-michael-mclaughlin
-
ABOUT EDSPIRA AND ITS CREATOR
* www.edspira.co...
* michaelmclaugh...

[@warrenng8297]

Sir, I don't know how you do it, but you do what my lecturers do in 2hours, in 15mins :)

[@MattLeitholt]

Even better, if you watch them at 2x the speed (my brain can handle it okay), it cuts your study time in half! :)

[@joels6874]

EXACTLY

[@smithsmith9429]

Legend

[@raduorghidan5308]

hadn't really understood ABC for all the 4 months of my course, understood it in 10 minutes from this video. great job, thank you

[@Edspira]

I'm so happy to hear that it clicked when you watched the video!

[@EvolveMusics]

Excellent explanation, way better compared to my textbook and lecturer. Thanks a ton!

[@NowakiFangirl]

Thank you for helping me pass my class. My professor mumbles and is confusing.

[@markedHitman]

Great video. I enjoy the side by side comparison and how you clearly state the case for ABC. After hearing you explain the benefits of ABC, it makes you wonder why everyone is not heralding ABC as the eventual standard of all firms in the future. I guess the sheer difficulty of implementation is the number 1 problem with ABC and once that problem is solved it could really take off.

[@allentian3009]

well-formatted and clear ideas of differences between the traditional accounting system and ABC system, with great examples.

[@makkahmadinah2023]

Absolutely Amazing Lectures. 1 hour lecture summarized in 10 minutes with full clarity and concept cleared....God Bless You 🙏🙏🙏

[@Edspira]

Glad to hear that!

[@sushmitakumar3999]

love your explanations :) way better than my lecturer. Helping me so much an hour before exam

[@Jayofteror]

You are easier to understand than my professor. :)

[@myhappyskin3093]

It would be great if there would be couple of example. Taking same number and calculate with different calculation methods

[@vivilin4571]

Thank you so much!!! Am preparing for my exam in two weeks, and your video sheds so much light on it.

[@ljtesh]

Quick question. At the end of the video you said, companies have to figure out whats best to use, either ABC or Traditional base on a cost basis analysis. But In US GAAP ABC is not accepted, why would you want to figure out which to use?

[@Edspira]

Excellent question. The company would need to decide which method to use for purposes of internal reporting. Internal reporting (which is the subject of managerial accounting) does not need to be GAAP as it is only used by managers within the firm to help make decisions. For external reporting (which is the subject of financial accounting), however, reports must be prepared in accordance with GAAP because the information is being used by people outside of the company (investors, creditors, etc.). Thus, firms can use ABC for internal reporting but not to create financial statements for external reporting. If this is still a little confusing, I have a video titled "Financial Accounting vs. Managerial Accounting" that might clear things up.

[@joshjamesrichardanderson3383]

Ver good vid mate

[@hassanwazzan8269]

Thank you

[@MfitM]

Would you say that it’s about leadership int he business and how we introduce ABC as a structure will effect it successful implementation and direct effect on the business going forward when making business decision for example?

[@nathantaylormckenzie]

thanks so much, much more straight-forward than my text book

[@Edspira]

I'm glad you are finding these videos useful. Thanks for watching!

[@wanarmix]

This was very useful for my essay. Thank you so much:)

[@zihaozhao6651]

one of the best sources out there

[@MrJakeeJohnson]

Good video, very helpful for my exam prep

[@cynthiamarobela8497]

wow! now I understand thank you so much

[@kylezinho_]

beautiful explanation, thank you!

[@Edspira]

You're very welcome!

[@musicwowz]

Thank you so much for all your videos! I am able to better understand the concepts now.

[@Sischika]

Please sir. Product Design A20 B30.
Supporting Cost A10 B20 in Activity based costing link with Traditional costing. Please how do you treat it.

[@Rawan-tk7tq]

Thank you so much it was simply illustrated

[@simplyspeakingonair5773]

Great assessment between the two systems. Thanks for the information. Kevin

[@drjohnny03]

is Standard costing and Traditional costing the same thing?

[@tbstartracy]

Thank you so much! This is very clear and definitely helps me to understand the process!

[@patsygreen20]

Will Activity Based Costing result in a zero under-over applied manufacturing overhead like it does in Job Order costing?

[@rmackgirl]

Thanks thoroughly explained

[@QuickHDTutorials]

But Marginal Costing is not allowed to be reported under GAAP right?

[@TheWalshy199]

Great intro video thanks

[@camilletan9371]

Sincerely appreciates your teachings!!! Thank you so much! :)

[@EspertoBusinessPlan]

Very helpful video, interesting and complete!

[@indunilB]

Thank you, very helpful

[@trentkestin9849]

Could you use ABC for external reporting if you don't use period costs? BTW, videos are amazing. Thank you :)

[@Haniakomi]

very clear, thank you!

[@lovebug888]

great video!

[@Edspira]

+love bug888 Thanks!

[@tomstanely]

My lecturer said that the allocation point is incorrect.

[@dineonkomo2479]

Thank you. Very helpful 👌

[@quaqmireful]

I wish to re-confirm, is it really the case that ABC could not be used for external reporting?
Though it is subjective, the figures/amounts are based on actuals.
Please re-confirm, thanks!

[@charmvicencio5536]

quaqmireful ABC Costing is not accepted by GAAP, thus it is only for internal accounting. Hope this helps!

[@kinjalphatnani]

Costing in general is for internal reporting and decision making

[@daencho7515]

Your channel is great - thanks, mate!

[@Edspira]

Thanks!

[@MrPanz3r]

damn this is super bloody useful dude thanks so much

[@rodwalsh3265]

I really enjoy your videos. I'm an adjunct and would like to create similar videos for my classes, can you tell me what tools you use to create these great videos?
Thank you!

[@Edspira]

Thanks! Camtasia Studio to screencast and a Wacom Bamboo tablet.

[@kadijachigodho5859]

best videos ever God bless

[@Halloitsme19]

THANK YOU SO MUCH

[@mariafrye5571]

As always you are amazing! May I ask you to post one on Time Driven ABC?

[@Edspira]

Thanks for the request. I'll add it to my list of requested videos which I intend to tackle this summer. Thanks for watching!

[@osamahRadman]

from where I can get the references for this information

[@Edspira]

Try the Managerial Accounting textbook by Noreen & Brewer

[@zzMjRzz]

amazing! thank you!

[@vinaypai7532]

Is that Ray Romano narrating this? I swear I pictured Manny teaching and the other characters looking on, bored and sleepy...

[@yoshinegus4019]

100 cost pools OMG that would be NUTS!

[@alyaniali6829]

2:00

[@alyaniali6829]

2:40

[@alyaniali6829]

0:50

[@johangeyvanpittius3698]

Ok but how do you apply this in a practical situation
Im not going to get a question in a test which asks to explain ABC but to implement it
Basically some examples would be nice to actually understand your gibberish

[@LTMavs29]

He has full length examples in other videos. Shouldn't be that difficult to locate them.

[@alyaniali6829]

1:35

[@CODMOD360]

hell yeah

[@riteshmanwani4735]

ille samj mey nhi aatiii mereko anna

[@john-paulattard7758]

can i get a hold of some ones email ? cause i really have some question about this for my university assignment
can anyone who understands this well provide me with an email?

[@adynyasha499]

Thank you

[@kindhu7863]

very helpful, thank you

[@alyaniali6829]

0:40

[@alyaniali6829]

1:25

[@alyaniali6829]

1:40

[@alyaniali6829]

1:30

[@alyaniali6829]

2:15