It is now fairly widely accepted that conventional cost accounting distorts management’s view of… 1 answer below »

It is now fairly widely accepted that conventional cost accounting distorts management's view of business through unrepresentative overhead allocation and inappropriate product costing.

This is because the traditional approach usually absorbs overhead costs across products and orders solely on the basis of the direct labour involved in their manufacture. And as direct labour as a proportion of total manufacturing cost continues to fall, this leads to more and more distortion and misrepresentation of the impact of particular products on total overhead costs.' (From an article in The Financial