Large Company Case StudyToday, more and more organizations prefer activity-based costing (ABC) system over activity-based costing system. on features. ABC takes into account the smallest details regarding activities and factors that add up to the final cost. ABC is based on an activity hierarchy in which different activities influencing cost accumulation are grouped into different categories. Such a costing method improves cost measurement by organizing information around activities (Thompson, 2003). The group will fulfill requirements (a) through (e) found at the end of the case. They will then find three sources on the Internet that compare and contrast activity-based costing systems and functionality-based costing systems. And, to demonstrate this, the group will discuss scenarios in which each system could lead to better decision-making in Huge Company. a.) Calculate the costs of each job using the current cost system. number of employees 1,000 Average cost per hour per person – 90,000,000/(2,000 X 1,000) = $45.00/hour/person Job 1: $45 $ Job 2: $45 X 160.00 work hours = $7,200 Job 3: $45 60 hours of work = $2,700b.) Recommend an alternative cost system that recognizes additional differences between tasks. Activity-based costing system improves product accuracy. costs and addresses internal operational concerns. It forecasts the actual costs associated with each product produced by the organization. (Dekker, 2003). Cost drivers are used to replace the general ledger which relied heavily on labor. The ABC system allows the integration of the ......middle of ......paper elements. Hilton: Cost ManagementStrategies for Business Decisions, second edition, McGraw-Hill, 2002. Thompson, (2003) Activity-Based Costing, accessed October 29, 2004 at http://www.bnet.com/abstract.aspx?scid=1770&docid -82061Cross, L. (2003) Progress in ABC Costing. Graphic Arts Monthly, retrieved October 30, 2004 from http://www.gammag.com/Current/index2(6-30-03).htmlTarr, JD, (2004) Activity Based Management - Fusion Process and Measurement. ACA Group, accessed October 30, 2004 at http://www.theacagroup.com/activitybasedmanagement.htm Dekker,L. (2003) Activity Based Costing: A Concept Whose Time Has Come. Retrieved October 30, 2004 from http://eee.bnet.com/abstract.aspx