A case study,plan the use of cash in a business and discuss the Assignment

A case study,plan the use of cash in a business and discuss the financial aspects of assessing managerial performance - Assignment Example The ABC costing process helps in the most beneficial allocation of resources on profit bearing products, departments and activities and reducing the costs associated with non-profitable products, services or activities. The Activity Based Costing (ABC) method is an extremely advanced costing method that helps to increase the profitability of an organization through the identification of the unnecessary costs that can be eliminated to lower the overall production costs of the organization. The Activity Based Costing (ABC) method is being considered by the case company i.e. Berry Ltd. Berry Ltd. has been using the traditional absorption costing method as the main costing technique for the company. The company manufactures three main products and the costs and resources of each of the products are allocated through the use of the absorption costing process. Absorption costing is a managerial costing method in which the expensing of the costs of all the products manufactured in the company are allocated through the consideration of both the total overheard cost and the total direct costs associated with the manufacture of each of the products. As per the Generally Accepted Accounting Principles (GAAP), absorption costing is the preferred method of costing used by the companies for the purpose of external reporting (Clyde, Brown and Whalen 2006). The management of Berry Ltd is considering the adoption of the Activity Based Costing (ABC) method in the company in order to achieve better cost management and control in the company. According to both the Production Director and the Finance Director of Berry Ltd. the use of the Activity Based Costing (ABC) method is likely to improve the overall cost control of the company and thus, lead to increased profitability in the business. Since, lowering the operational costs is a major way of increasing the margins associated with the manufacture and subsequent