Activity Based Costing | ABC Costing v/s Traditional | CMA | ACCA F5 | ACCA F2 | Commerce Specialist

This video from Commerce Specialist explains the concept of Activity Based Costing. Detailed explanation is given for ABC Costing Techniques, cost drivers, cost driving activities, comparison between ABC and Traditional Costing and a fully solved example.
This tutorial/lecture video is very relevant and useful for students of B. Com, O Levels, A Levels, BBA, MBA, CA, ACCA, CMA, CIMA, CIA and CPA.
About:
Commerce Specialist is a Certified Management Accountant (CMA) from USA, holds Certification in International Auditing from ACCA-UK, a Bachelors in Accounting, A teaching qualification of B.Ed., an MBA in Finance along with over 20 years’ experience of working in various MNCs in different sectors including Banking, NBFIs, Retail, Oil & Gas, Telecommunication, and top business schools, colleges and universities.
website link: www.comparativeedge.com
Link of my previous videos:
1. Depreciation Basics: [Methods and Calculations] • Depreciation | Methods...
2. IAS 16 Property, Plant & Equipment: • IAS 16 PPE | Property,...
3. Inventory Valuation [Systems & Methods]: • Stock Valuation System...
4. Break Even Analysis (CVP Analysis) • Break-Even Analysis | ...
5. IAS 7 Statement of Cash Flows: • Statement of Cash Flow...
6. Accounting for Receivables: • Accounting for Receiva...
7. Ratio Analysis • Ratio Analysis | Finan...
8. MBA VS ACCA • BBA V/S ACCA | MBA V/S...
9. Capital Budgeting / Investment Appraisal: • INVESTMENT APPRAISAL |...
10. Basic Accounting: • ACCOUNTING BASICS | FU...
11. Accounting Basics Part 2: • ACCOUNTING BASICS 2 | ...
12. How to Pass CMA • HOW TO PASS CMA USA EX...
13. Operate or Shut down decisions • Operate or Shut Down D...
14. Life Cycle Costing • LIFE CYCLE COSTING | P...
15. HOW TO PASS ACCA EXAM • HOW TO PASS ACCA IN FI...
16. IAS 33 (EARNINGS PER SHARE) • How to calculate Earni...
17. TARGET COSTING • Target Costing | Targe...
18. HOW TO DO CMA USA ESSAY SECTION • How to attempt CMA ESS...
19. ERRORS & THEIR RECTIFICATION • Rectification of Error...
20. SUSPENSE ACCOUNTS • Suspense Account | Rec...
21. OPERATING & FINANCIAL LEVERAGE • Operating Leverage | F...
22. ACCOUNTING CONCEPTS & PRINCIPLES • Accounting Concepts & ...
23. CPA • CPA USA | Certified P...
Viewers and students can contact me on [e-mail] or email me at [e-mail] or whatsapp me on [phone].
#activitybasedcosting #accaf5 #costaccountingabc

[@mosesojangole]

Thankyou for your generosity. You are making life easy for us. (Cpa moses from uganda)

[@sandeepmehta3888]

This is a little note to let you know just how helpful you have been. You’re such an amazing teacher and I hope you know that! Thank you!

[@CommerceSpecialist]

Thanks a lot dear for your appreciation, thats what keeps me going.

[@tereziafucova1308]

@@CommerceSpecialist EXCELLENT EXPLANATION!!! Many thanks. Wishing you all the very best.

[@TakuQuinta]

Wonderful 👏
Can you please represent it in a tabular form?

[@yg7100]

Sir, can you pls post a video on Marginal and Standard Costing

[@CommerceSpecialist]

Sure very soon

[@patrickmungulube6134]

Cost per unit is supposed to be 9.18

[@miriamnork5163]

Thank you Sir. When preparing F/O budget as part of operations budget, the variable component using ABC should be arrived at by multiplying the units to be manufactured by the predetermined overhead rate that was calculated using ABC. Please advise if my understanding is correct.
Thank you
Miriam from Papua New Guinea

[@miriamnork5163]

Dear Sir
Please advise if my statement above is correct.

[@mohammadzain8845]

is there another video on this channel, concerning multi products of same question

[@CommerceSpecialist]

No but handouts with solutions are available to patreons

[@nawabKhan-tv7vh]

​@@CommerceSpecialistsir in short what does traditional costing means

[@antonymary8510]

Sir please teach 14 marks problem for strategic cost management II For Bengaluru University

[@CommerceSpecialist]

@@antonymary8510 sure

[@dilkiayesha4204]

the best explanation! Thank you so much for the good work!

[@CommerceSpecialist]

@@dilkiayesha4204 thx dear🙏👍

[@lucrishagilbert1482]

Watching from Zimbabwe 🇿🇼

[@CommerceSpecialist]

👍🙏

[@mohanaaruliah7269]

Thank you very much Sir
Very much appreciated!

[@CommerceSpecialist]

@@mohanaaruliah7269 ur welcome👍

[@oladungift387]

Your teaching ability shows how passionate and gifted you are.
Thanks a lot
From Nigeria

[@CommerceSpecialist]

Thx my dear🙏👍

[@JosephSatoh-em1sl]

Thanks for your well expaination sir

[@CommerceSpecialist]

@@JosephSatoh-em1sl ur welcome dear👍🙏

[@johnankitgomes5442]

I am really proud of how you achieved your place where you are right now. Thank you! :)

[@prachipandey5601]

Excellent video- the best I found on youtube to hep understand the computing of ABC. Thank you!

[@CommerceSpecialist]

@@prachipandey5601 thanks dear👍👍

[@issajunior5508]

Such an amazing and wonderful teacher he is. I love how eloquent and articulate he is. He is passionate and gifted. I hope he knows this. Sir i would like to let you know that you have such a positive impact on my life. You have touched so many lives through your teaching. I am an ACCA student and i watch most of your videos on different topics and I pray for you everyday. May Allah shower you with his endless blessings. I cant thank you enough. But i hope i will meet you one day to thank you in person.
I will also highly appreciate if you can share your whatsapp contact if possible.
So much ❤ from Kenya.

[@CommerceSpecialist]

Thanks a lot dear😍🙏👍

[@bala4967]

16:41

[@mohammedrizlan-oh7zm]

Sir could you please explain difference between marginal costing and Throughput accounting

[@saravananpk1330]

Good day
Total budgeted OH is 720K USD and Sum of all activities budget cost is 1440K. (400k, 90k, 800k, 100k, 50k).
Kindly clarify my doubt Why there's gap.

[@keysonmuunda6767]

Am writing costing in a few days ,this is so good i just discovered you in a few days this is fulfilling. Thanks

[@asifansarii600]

Thanks very much for uploading the video.
I found very helpfull,the way you explain things is appreciable.

[@MrVenkatesh25]

Fantastic teaching of Traditional Cost and ABC method of costing to calculate Per Unit Cost. Tomorrow I have exam and it was of great help, sir. please keep doing the great job you have been doing and inspiring learners on your channel

[@CommerceSpecialist]

Good Luck my dear👍

[@DHANASHREEKAMBLE-g7f]

M/s Priya Industries is in the business of manufacturing and selling lubricants. There are 4 types of products. The information available about each:
P1 P2 P3 P4 Total
No. of units produced 1300 2000 1500 1200 6000
Labour Hours 250 350 200 200 1000
No. of units in 1 packet 2 5 3 3 13
Machine Hours 260 450 360 180 1250
The total cost incurred is as under:
Total Costs Rs.
Salaries and Wages 25,00,000.00
Supervisor Cost 75,000.00
Factory Overheads 10,00,000.00
Packaging costs 6,00,000.00
Total Costs 41,75,000.00
It is assumed that the supervisor spends time in proportion of no.of units produced. Calculate the cost of each unit of the products under:
a) Traditional Costing
b) ABC Costing

[@stutiparekh4017]

Do u have a solution for it?

[@makeittrades5750]

Great lesson thank you so much! Is it true ABC would be more for internal managerial decision as where traditional method is the one required for reporting under U.S GAAP?

[@CommerceSpecialist]

Yes

[@RasanjanaTv]

When we divide cost base on activity (cost pool) can we consider administartion, selling and distribution and finance expenses also.

[@ShehryarAli-l8h]

Thanks alot❤.Btw! off topic how did you got this fluent in speaking english as its apparent that it is not your first language?

[@CommerceSpecialist]

Thanks a lot my dear. Its cuz of my school😊👍

[@imranahmedmirza7045]

Nice explained the topic with easy style, please do correct the unit cost 9.18 instead of 8.18 under traditional costing. Can you guide which cost system should be applied in motor cycle manufacturing and assembly whether ABC or absorption cost system?

[@cmaelaiyapallavan]

I love you

[@Lifeofsaali]

Thankyou sir💯♥️

[@CommerceSpecialist]

🙏👍

[@asifansarii600]

Just want to ask that different industry has different cost pool and cost drivers.
I am always confused as to how will I recognise the cost drivers.
Is there any specific way.

[@knagasaianirudh2041]

Sir please say me 🙏🏿 why u didn't activities cost in Absorption costing method please say this

[@CommerceSpecialist]

The video is there

[@arafatislam3056]

I'm watching from Bangladesh🇧🇩

[@CommerceSpecialist]

Thx, regards to all my students from Bangladesh

[@aleezaali0777]

A sincere thank you for being the guiding light in my CMA exam journey. You made the journey way less rocky. Big high-five!♥️

[@CommerceSpecialist]

Ur welcome dear🙏👍

[@sabbrina78]

Thank you

[@CommerceSpecialist]

👍😊

[@MdArfa-k5v]

Thank you so much sir for this PRACTICAL AND AWESOMELY EXPLANATION ❤❤❤❤❤❤❤❤❤❤

[@CommerceSpecialist]

Ur welcome my dear🙏👍

[@nowshadamin5748]

machine cost per unit would be $0.02 not $0.20, because of $80,000/80,000 HR= $1/Batch. if the machine budgeted amount $800,000 so how total overhead $720,000?
Thanks sir, for your nice class

[@sapnapatel842]

Full material for us cma part 1 how to get.......from u sir??

[@CommerceSpecialist]

For that you need to register in my course😊

[@lionelsongweh]

Thanks sir from Cameroon. I LOVE ABC BECAUSE OF YOU SIR

[@777fareez]

Great explanation ! Very clear and detailed !

[@CommerceSpecialist]

Thx dear

[@GG-xu4hd]

What is the cost driver for order handling??? I am doing exercise and it does not have production runs.

[@CommerceSpecialist]

It could me no. Of orders, or orders completed

[@GG-xu4hd]

@@CommerceSpecialist thank you

[@beatrixkanyangela2358]

Thank you very much sir… your teaching is very helpful 🇳🇦

[@CommerceSpecialist]

Ur welcome dear🙏👍

[@stutiparekh4017]

very well explained sir thank u so much!!

[@CommerceSpecialist]

@@stutiparekh4017 ur welcome dear

[@samyukthashekhar8207]

thabk you so much for this video it was really helpful. just had a question why wasn't the mat. handling divided by 3000

[@moithekimatyeni]

I Knew Nothing Before I Watched This Video, But I Know A Lot More Now. Thank You So Much ❤

[@CommerceSpecialist]

Thanks dear

[@alicenyangoma8040]

Thank you so much, I had never understood this with my tutor until I met you. Blessings follow you Sir

[@CommerceSpecialist]

Thanks a lot my dear🙏👍

[@shivkumarsingh2595]

hii sir this is shivkumar singh in some of question we have to calculate cpu but no direct labour or direct material cpu is not given instead of that annual output in units and total machine hours is given ... in that how ut should be done ...... please reply

[@CommerceSpecialist]

Can only comment if i see the question dear

[@shivkumarsingh2595]

Kkk sir

[@shivkumarsingh2595]

Just let me know where to send the question screenshot

[@CommerceSpecialist]

My email

[@christophercrawford1618]

Thank you so much! This was a great explanation!

[@CommerceSpecialist]

You are welcome dear

[@arhamjain5267]

Beautifully explanation thank you so much sir
You made it’s so easy
In Simple language

[@jaffarrizvi3447]

I downloaded almost all your lectures eagerly waiting for more productive lectures pls

[@CommerceSpecialist]

Sure dear

[@harikrishnagoud2147]

Excellent explanation sir 🙏🙏👏🏼👏🏼👏🏼

[@Shenaz_N]

How ABC costing provide greater unit costs for low volume products than is reported by Absorption costing?

[@chalanasankalpa3066]

Thank you so much sir but if you can explain the effect to p&l with opening and closing stock❤

[@alletanzuma7058]

You are good at what you are doing. Super star. Very clear explanations and links to practical environment

[@CommerceSpecialist]

Thanks dear

[@vietttm4619]

Thank you very much Sir. Please keep it up for sharing us such informative and useful videos .

[@CommerceSpecialist]

You are welcome dear

[@alletanzuma7058]

Keep going. We want more of such staff

[@CommerceSpecialist]

Sure

[@chalaniwathsala4905]

Thanks So much, This is very useful..

[@mohammedasfin6319]

Can you do job order costing and operation costing!!?

[@CommerceSpecialist]

Job order costing video is already uploaded

[@jonjrosen]

Thank you! I have my final CPA exam Wednesday (BEC) and this explained a lot

[@CommerceSpecialist]

Good Luck

[@jonjrosen]

@@CommerceSpecialist they said BEC would be a lay-up but I am finding out that's not true 😂

[@SJS001]

The best teacher in the world.

[@IamCraftizen]

Sir Your vdos is too helpful

[@CommerceSpecialist]

Thx dear👍🙏

[@JoyAccounting]

Thank you so much. Enjoyed your video.

[@CommerceSpecialist]

Ur welcome dear

[@masudpervez9872]

Your lecture is just awesome for concept clarification.

[@CommerceSpecialist]

Thx Masud😊👍

[@NadiaNadia-gz2fu]

amazing

[@JohnBassey]

Great ❤️🇳🇬

[@mohammedrizlan-oh7zm]

Who's this gentleman,

[@CommerceSpecialist]

???

[@carolinemunyati8276]

Watching frm Zambia..

[@CommerceSpecialist]

@@carolinemunyati8276 Thanks dear. Loce to all my supporters from Zambia

[@CostAccounting-g8m]

Thank you so much, you speak English clearly! Most of the time, it's mixed and with difficult accent to grasp.

[@CommerceSpecialist]

Thanks dear😊🙏👍

[@thehappypeople1762]

Thankyou so much for being veg practical.

[@lucrishagilbert1482]

So very well explained 👏

[@CommerceSpecialist]

Thanks👍🙏

[@jaffarrizvi3447]

Bravo

[@uchechiagather5745]

Thank you Sir

[@CommerceSpecialist]

@@uchechiagather5745 ur welcome

[@mansisemwal3306]

Valuable

[@اروىسعود-ف7س]

Thanks for you efforts
But dear teacher how can i calculate profit for each product using traditional costing and ABC ?

[@CommerceSpecialist]

Same way, for cost per unit, take abc cost per unit, n for traditional, take cost per unit of traditional, other elements will be the same

[@pallabjyoti4581]

Sir you have beautifully explained each point.. My doubts got cleared.. Thankyou sir

[@CommerceSpecialist]

You are most welcome dear😊👍🙏

[@omarsaeed531]

Great explanation

[@CommerceSpecialist]

Thx Omar🙏👍

[@thokoselemani2386]

Can you please post a video for through put accounting

[@roshanrajapakse2533]

Sir Did you do WACC caculation

[@CommerceSpecialist]

Its coming soon dear

[@xoadya]

thanks a lot! it is very useful

[@njabulomoyo1049]

Well explained thanks

[@CommerceSpecialist]

Thx Moyo

[@Aryantiwari1119]

Thankyou sir. Great help

[@aftabahmad9071]

very impressive

[@CommerceSpecialist]

Thx dear

[@umrasabamir186]

you need to first fix your camra...video is blur.

[@CommerceSpecialist]

Pls guide me😊

[@shahmafidhu5559]

Thankuu sir❤❤

[@CommerceSpecialist]

🙏👍

[@Naveenkumar-qy5wy]

Thanks for your video

[@manisankarjana3617]

Thank You Very Much,Sir🤓🤓🤓

[@CommerceSpecialist]

Thx buddy

[@veenamanu8892]

Thank you sir

[@HDKaush]

Thank You Sir❤

[@sheemarajanpillai5466]

You are the best 👍😊

[@Juanjack18]

Thank you 🙏🏼

[@rikasahamed6276]

I'm happy to find you sir. It's mean a lot😍

[@CommerceSpecialist]

Thx dear

[@richardalornyo916]

You are such an amazing teacher!

[@CommerceSpecialist]

Thanks a lot dear👍🙏

[@ruthsarah8258]

perfectly explained thank you

[@CommerceSpecialist]

Thanks Ruth

[@MaboshabaneLegodi]

I'm never failing this again

[@CommerceSpecialist]

Thx a lot, Good Luck🙏👍

[@Ramshackle23]

You are an incredible teacher!
Thank you so much!

[@CommerceSpecialist]

You are welcome🙏

[@Sischika]

I want to learn with you

[@CommerceSpecialist]

You are most welcome dear

[@chamfelix7072]

Amazing. Thank you

[@CommerceSpecialist]

Thx Cham

[@muhammadjunaid272]

Hello Sir. How to enrol for Acca classes with you seperatly?

[@CommerceSpecialist]

Pls email me

[@RHAishwarya]

Sir, could you please post video on throughput costing. It'll be very useful please.

[@CommerceSpecialist]

Sure

[@HiraNoor-my6qt]

Haven't words to say tnnx such an amazing tutor 🎉

[@CommerceSpecialist]

Dear Hira, thx a lot🙏