21-07-2012, 11:47 AM
ACTIVITY BASED COSTING MODEL CLASSIC PEN
Classic Pen ABC Model - GROUP I.pptx (Size: 133.63 KB / Downloads: 49)
Activity Identification
First, activities must be identified and grouped together in activity pools.
Activity Analysis
ABC continues with activity analysis, clearly identifying the processes which support a product.
Assignment of Costs
Based on the findings above, costs are assigned to an activity pool. These pools will each have some contribution to object cost.
How to identify the cost drivers?
Identify the processes/activity
Ignore activities that use less than 5% of individuals time or a resources capacity
Prepare activity dictionary
Identify the driver for the process of activity
Relate activities to cost pool
How ABC can improve the management’s decision?
Helps to identify inefficient products, departments and activities.
Helps to allocate more resources on profitable products, departments and activities.
Helps to control the costs at any per-product-level level and on a departmental level.
Helps fixing the price of a product or service
Better understanding of overheads.
Enables costing of processes, supply chains, and value streams