ABSTRACT
Previously, conventional cost accounting systems focused on assigning costs to production cost centers (such as service center costs) and to unit-lever drivers (such as direct labor hours or direct labor dollars). This method of accounting has several deficiencies. First, it cannot correctly determine the actual total product and service cost. Second, it cannot generate enough useful information to allow management to make good operating decisions. As a manager, you should be familiar with another accounting system, called activity-based costing (ABC). This method will allow you to make better decisions about pricing, product mix, and technology.
