Few people would start a journey with a map that shows neither where they are nor where they are going. Yet many companies seek to compete without knowing the true cost, and profit, of their products or services, and customers.
Directors often base corporate strategy on misleading information that supports bad decisions. This only helps competitors. Traditional financial information systems measure a company’s performance only in the aggregate.
They may not help to find opportunities to increase competitiveness in the market place.
To create more value and enhance their profitability, organisations in manufacturing and service require accurate information on costs. Activity Based Costing (ABC) can provide it. But organising an effective ABC initiative is not as simple as opening a book and beginning at Chapter One.
Understand the Meaning, Kinds and Advantages of Subsidiary Books.
Know the Purpose, Format, Posting and Balancing of Purchases, Sales, Purchases Return and Sales Return Books.
MARGINAL COSTING AS A TOOL FOR DECISION MAKINGShubham Boni
DON'T FORGET TO LIKE AND SHARE THE PRESENTATION.
MARGINAL COST:-
“Marginal cost is the additional cost of producing an additional unit of product.”
MARGINAL COSTING:-
“In Marginal costing technique, only variable costs are charged as product costs and included in inventory valuation.”
MARGINAL COSTING HELPS IN DECISION MAKING:-
1.Fixation of Selling Price.
2.Exploring New markets.
3.Make or buy decisions.
4.Product mix
5.Operate plant or shut down.
CASE STUDY 1:-
MAKE OR BUY DECISION.
CASE STUDY 2:-
PRODUCT MIX.
Few people would start a journey with a map that shows neither where they are nor where they are going. Yet many companies seek to compete without knowing the true cost, and profit, of their products or services, and customers.
Directors often base corporate strategy on misleading information that supports bad decisions. This only helps competitors. Traditional financial information systems measure a company’s performance only in the aggregate.
They may not help to find opportunities to increase competitiveness in the market place.
To create more value and enhance their profitability, organisations in manufacturing and service require accurate information on costs. Activity Based Costing (ABC) can provide it. But organising an effective ABC initiative is not as simple as opening a book and beginning at Chapter One.
Understand the Meaning, Kinds and Advantages of Subsidiary Books.
Know the Purpose, Format, Posting and Balancing of Purchases, Sales, Purchases Return and Sales Return Books.
MARGINAL COSTING AS A TOOL FOR DECISION MAKINGShubham Boni
DON'T FORGET TO LIKE AND SHARE THE PRESENTATION.
MARGINAL COST:-
“Marginal cost is the additional cost of producing an additional unit of product.”
MARGINAL COSTING:-
“In Marginal costing technique, only variable costs are charged as product costs and included in inventory valuation.”
MARGINAL COSTING HELPS IN DECISION MAKING:-
1.Fixation of Selling Price.
2.Exploring New markets.
3.Make or buy decisions.
4.Product mix
5.Operate plant or shut down.
CASE STUDY 1:-
MAKE OR BUY DECISION.
CASE STUDY 2:-
PRODUCT MIX.
01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
03. Understand the Primary and Secondary Distribution of Overheads.
04. Understand the Traditional & Activity Based Costing methods
05. Identify the value added & non value added activity
This power point presentation related to process costing. which is useful to students who studying B.com, BBA,M.COM MBA etc.
It involves short notes on definition of process costing,its features,applications,difference between process costing and job costing, advantages and disadvantageous of process costing, procedure of process costing,format of process account, process losses and abnormal gain.
Decision making process in Management AccountingYamini Kahaliya
This presentation is on decision making process.
this includes following points :-
Cost-Volume Profit Analysis
Alternative Choice Decision –
Relevant cost
Sunk cost
Shut-down Process
01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
03. Understand the Primary and Secondary Distribution of Overheads.
04. Understand the Traditional & Activity Based Costing methods
05. Identify the value added & non value added activity
This power point presentation related to process costing. which is useful to students who studying B.com, BBA,M.COM MBA etc.
It involves short notes on definition of process costing,its features,applications,difference between process costing and job costing, advantages and disadvantageous of process costing, procedure of process costing,format of process account, process losses and abnormal gain.
Decision making process in Management AccountingYamini Kahaliya
This presentation is on decision making process.
this includes following points :-
Cost-Volume Profit Analysis
Alternative Choice Decision –
Relevant cost
Sunk cost
Shut-down Process
Q.2 steps required to implement ABC within the companyABC Costing .pdfanjalipub
Q.2 steps required to implement ABC within the company
ABC Costing is a supplemental method of cost accounting that provides the decision-making
information absent from traditional costing methods. While ABC costing is not limited by
business unit boundaries, it can not fully supplant traditional costing methods as it often fails to
meet financial reporting requirements for businesses.
ABC Costing focuses on costs contributing to production of a product. It does not attribute other
general costs that do not have at least an indirect relationship to the product. While traditional
costing systems focus on direct costs and burden a product with other fixed costs, activity based
costing increases accuracy of indirect cost assignment.
In their 1999 book, Managerial Accounting, Garrison and Noreen identify six core steps to ABC
costing implementation.*
Implementation Steps
Step #1: Activity Identification
First, activities must be identified and grouped together in activity pools. Activity pools are the
supporting activities that tie in to a product line or service These pools or buckets may include
fractionally assigned costs of supporting activities to individual products as appropriate during
the second step.
Step #2: Activity Analysis
ABC continues with activity analysis, clearly identifying the processes which support a product
and avoiding some of the systemic inaccuracies of traditional costing. ABC costing requires
activity analysis, similar to the process mapping found in lean manufacturing.
This activity analysis identifies indirect cost relationships and allows assignment of some
percentage of that activity to an end product directly.
Step #3: Assignment of Costs
Based on the findings of step #1 and #2, costs are assigned to an activity pool. For example,
human resources costs would be assigned to indirect administrative or indirect management
costs. These pools will each have some contribution to object cost.
Step #4: Calculate Activity Rates
Initial analysis may include direct labor hours, or indirect support labor. These activities must be
assigned a value in real currency. All weightings must be added at this step. For instance,
production labor hours should be in terms of a weighted labor rate including benefit costs.
Step #5: Assign Costs to Cost Objects
Once activity costs, pools and rates are identified and clearly defined, the next step is to assign
them to cost objects. Objects are generally defined as the results offered to a customer. In both
manufacturing and non-manufacturing environments, this product should have some saleable
value to compare to the assigned costs.
Step #6: Prepare and Distribute Management Reports
Once ABC costing analysis is complete, that cost data should be placed in a concise and coherent
manner for cost object and process owners. This communication of the costing analysis is critical
to justify the cost of the analysis, as often this is not an inconsequential cost.
Q.3our classifications of the ABC .
The term ‘cost’ has a wide variety of meanings. Different people use this term in different senses for different purposes. For example, while buying a book, you generally ask, “how much does it cost”? Here the cost means price.
The costing terminology of the Institute of Cost and Works Accountants,London defines cost as “the amount of expenditure incurred on or attributable to a given thing”.
Costing is the technique and process of ascertaining costs. In simple words costing is a systematic procedure of determining the unit cost of product/service.
ACtivItY BaSeD CostinG, Value ChAin AnalysiS, TargeT cosTing & Life Cycle Cos...Sonu Sah
It is the small presentation on the topic of activity based costing, value chain analysis, target costing and life cycle costing of the Cost and Management Accounting.
Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each.
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Salah Skaik - Marketing & Business Development Consultant
Implicitly or explicitly all competing businesses employ a strategy to select a mix
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price and product quality), as well as assessing competitive and market conditions
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A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
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RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
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Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
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"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
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LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
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Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
4. Topics In Chapter: (Objectives)
Understand activity-based costing and
how it differs from a traditional costing
system.
Assign costs to cost pools using a first-
stage allocation.
Part A: Salah A. Skaik
4
5. Topics In Chapter: (Objectives)
Compute activity rates for cost pools.
Assign costs to an object using a
second-stage allocation.
Use activity-based costing to compute
products and customer margins.
Part B: Mazen Hammoda
5
6. Topics In Chapter: (Objectives)
Prepare an action analysis report
using activity-based costing data and
interpret the report. (Appendix 8A).
Use activity-based costing techniques
to compute unit product costs for
external reports. (Appendix 8B).
Part C: Mohammed Shaat
6
7. Introduction
Activity-based costing (ABC) is a costing
method that is designed to provide managers
with cost information for strategic and other
decisions that potentially affect capacity and
therefore “fixed” as well as variable costs.
7
10. Introduction
1) The official costing system that is
used for preparing external
financial reports.
2) The activity-based costing system
that is used for internal decision
making and for managing activities.
10
12. Overview
In activity-based costing:
1) Nonmanufacturing as well as manufacturing
costs may be assigned to products, but only on
a cause-and-effect basis.
12
14. Overview
In activity-based costing:
3) Numerous overhead cost pools are used,
each of which is allocated to products and
other cost objects using its own unique
Measure of activity.
14
15. How Costs Are Treated under
Activity-Based Costing
Nonmanufacturing Costs and Activity-Based Costing
In traditional cost accounting, only manufacturing
costs are assigned to products. Selling and
administrative expenses are treated as period
expenses and are not assigned to products. However,
many of these nonmanufacturing costs are also part
of the costs of producing, selling, distributing, and
servicing specific products.
15
16. How Costs Are Treated under
Activity-Based Costing
Nonmanufacturing Costs and Activity-Based Costing
For example, commissions paid to salespersons,
shipping costs, and warranty repair costs can be
easily traced to individual products.
16
17. How Costs Are Treated under
Activity-Based Costing
Nonmanufacturing Costs and Activity-Based Costing
In this chapter, we will use the term overhead to
refer to nonmanufacturing costs as well as to indirect
manufacturing costs
17
18. How Costs Are Treated under
Activity-Based Costing
Nonmanufacturing Costs and Activity-Based Costing
In activity-based costing, products are assigned all of
the overhead costs—nonmanufacturing as well as
manufacturing—that they can reasonably be
supposed to have caused.
18
19. How Costs Are Treated under
Activity-Based Costing
Manufacturing Costs and Activity-Based Costing
In traditional cost accounting systems, all
manufacturing costs are assigned to products— even
manufacturing costs that are not caused by the
products.
19
20. How Costs Are Treated under
Activity-Based Costing
Manufacturing Costs and Activity-Based Costing
Manufacturing overhead includes costs such as the
factory security guard’s wages, the plant controller’s
salary, and the cost of supplies used by the plant
manager’s secretary. These types of costs are assigned to
products in a traditional absorption costing system even
though they are totally unaffected by which products are
made during a period.
20
21. How Costs Are Treated under
Activity-Based Costing
Manufacturing Costs and Activity-Based Costing
In contrast, activity-based costing systems do not
arbitrarily assign these types of costs, which are
called organization-sustaining costs, to products.
Activity-based costing treats these types of costs as
period expenses rather than product costs.
21
22. Cost Pools, Allocation Bases, and Activity-Based Costing
In activity-based costing, an activity is any event that
causes the consumption of overhead resources.
22
23. How Costs Are Treated under
Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
In activity-based costing, An activity cost pool is a
“bucket” in which costs are accumulated that relate
to a single activity measure in the ABC system.
23
24. How Costs Are Treated under
Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
In activity-based costing, An activity measure is an
allocation base in an activity-based costing system.
The term cost driver is also used to refer to an activity
measure because the activity measure should “drive”
the cost being allocated.
24
25. How Costs Are Treated under
Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
The two most common types of activity measures are
transaction drivers and duration drivers.
25
26. How Costs Are Treated under
Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
Transaction drivers are simple counts of the number
of times an activity occurs such as the number of bills
sent out to customers.
26
27. How Costs Are Treated under
Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
Duration drivers measure the amount of time
required to perform an activity such as the time spent
preparing individual bills for customers.
27
28. How Costs Are Treated under
Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
In general, duration drivers are more accurate
measures of resource consumption than transaction
drivers, but they take more effort to record. For that
reason, transaction drivers are often used in practice.
28
29. How Costs Are Treated under
Activity-Based Costing
Traditional cost systems rely exclusively on allocation
bases that are driven by the volume of production.
On the other hand, activity-based costing defines five
levels of activity—unit-level, batch-level, product-
level, customer-level, and organization sustaining
29
30. How Costs Are Treated under
Activity-Based Costing
• Unit-level activities
• Batch-level activities
• Product-level activities
• Customer-level activities
• Organization-sustaining activities
30
31. Designing an Activity-Based
Costing (ABC) System
Characteristics of successful ABC Implementations:
Top Management Support.
Link to evaluations and rewards.
Cross functional involvement.
31
38. Cont. Step 1
• Customer Orders - assigned all costs of resources that are
consumed by taking and processing customer orders.
• Product Designs - assigned all costs of resources consumed
by designing products.
• Order Size - assigned all costs of resources consumed as a
consequence of the number of units produced.
• Customer Relations – assigned all costs associated with
maintaining relations with customers.
• Other – assigned all overhead costs that are not associated
with the other cost pools.
38