Functional Based Costing Versus Activity Based Costing

• Functional based costing or Traditional cost accounting techniques used by most organizations prior to 1990s.
• Uses easy to obtain drivers like sales dollars or sales volume to spread overhead to products/services/customers.
• Used for both internal and external costing
• Simpler than Activity Based Costing
• Distorts costs so high volume products/services are over-costed and low volume are under-costed
• Predecessor to Activity Based Costing.

Email below or call John Antos or Steve Peacock at 972-980-7407 to find out how to better cost your products/services, call centers, processes, SKUs, and channels of distribution.