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The traditional cost accounting system allocates manufacturing overhead cost to manufactured products.

Also known as the conventional method, it assigns indirect cost of a factory to the items manufactured on the basis of volume like the number of units produced, hours of direct labour etc (accountingcoach.com). Considering the dynamism of our market today, the traditional cost accounting systems is not sufficient enough to meet todays new information requirements, Livia R, (2000) because it is rigid and simple. This makes the traditional costing system an outdated one in most companies today. for example, one of the factors used in assigning cost in the traditional cost system is direct labour, in most companies today computers and machines are used in productions . Using direct labour in this instance will not give the best cost driver to use. The traditional cost system could also lead to bad management decision making because it does not include non manufacturing costs, it does not detail the analysis required ascertain the true cost of servicing customers. Some of the alternatives to the traditional cost systems are Activity Based Costing: unlike traditional cost accounting, activity based accounting build up overhead cost for every organizational activity before assigning the cost of the activities to the products/ services or customers causing that activity. it is the (encyclopedia of management) the process of identifying appropriate output measures of activitives and resources (cost drivers) and their effects on the costs of making a product or providing a service). The advantages of activity based costing are that It gives room for greater costing accuracy It eliminates irrelevant cost to a product since cost are assigned to only products that require the activity for production It makes interpretation of cost for internal management The ability to enable benchmarking and a greater understanding of overhead costs. http://smallbusiness.chron.com/traditional-costing-vs-activitybased-costing-33724.html the supply chain operations reference model SCOR is another important approach to aid cost and performance monitoring Roach, (2011), It is a hierarchical model, consisting of four different levels: competitive advantage, strategy implementation and process definition, detailed process elements, and implementation. 1. Rushton, A., Croucher, P. and Baker, P (2010) The Handbook of Logistics & Distribution Management Kogan Page Limited, 4th edition 2. http://smallbusiness.chron.com/traditional-costing-vs-activitybased-costing33724.html 3. http://www.gale.cengage.com/pdf/samples/sp665568.pdf 4. http://www3.ekf.tuke.sk/konfera2008/zbornik/files/prispevky/rac_livia.pdf 5. http://blog.accountingcoach.com/taditional-method-cost-accounting/