The document discusses activity-based costing (ABC) and activity-based management (ABM). It provides details on how Aerotech, a company that produces circuit boards, implemented ABC to more accurately assign overhead costs. ABC identified multiple cost pools associated with different activities. This revealed that the traditional costing system understated the costs of complex, low volume products. ABM focuses on managing activities to reduce costs by eliminating non-value added activities. Customer profitability analysis and just-in-time inventory systems are also discussed.
Activity based costing is considered to be useful only for Manufacturing Organizations whereas reality is that it is equally usefull to Service providers
Activity based costing is considered to be useful only for Manufacturing Organizations whereas reality is that it is equally usefull to Service providers
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
01.Understand the concept of âOverheadsâ.
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
ABC is a costing system where indirect costs are assigned to products and services. The system establishes a relationship between overhead costs and production activities by allocating overhead costs to them with high precision. As a result, overhead costs are allocated more accurately based on their relevant activity levels. The system has eliminated the defects of the traditional/absorption costing system. ABC is used both as a planning tool and as a controlling instrument after the production is finished. ABC provides the basis for pricing decisions, inventory valuation, profitability analysis and overhead allocation. The system can effectively be used for both products and services.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
01.Understand the concept of âOverheadsâ.
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
ABC is a costing system where indirect costs are assigned to products and services. The system establishes a relationship between overhead costs and production activities by allocating overhead costs to them with high precision. As a result, overhead costs are allocated more accurately based on their relevant activity levels. The system has eliminated the defects of the traditional/absorption costing system. ABC is used both as a planning tool and as a controlling instrument after the production is finished. ABC provides the basis for pricing decisions, inventory valuation, profitability analysis and overhead allocation. The system can effectively be used for both products and services.
Activity Based Costing: A Case of Plastim CorporationRahul Dhiman
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Activity Based Costing: A Case of Plastim Corporation. This case is about comparison between the Modern Costing system is better than The Traditional System.
Prima Plastics, as the name suggests manufactures plastic moulded furniture (PMF). The company manufactures products ranging from chairs, baby chairs, dining tables, stools, teapoys, material handling products etc and competes with the likes of Nilkamal, Wimplast, and several unorganized players.
Till recently the company also had another business line of Aluminum Composite Panels (ACP), however the same was consistently reporting losses and in FY 15 the management
decided to close the same.
The company sells its products through a network of ~200 distributors and over 2000 dealers across India and operates manufacturing facilities in Daman and in Kerala. Besides
domestic sales, company also exports its products mainly to Africa, Middle-East and Central America.
Further, Prima Plastics also has a 50:50 joint venture (JV) in Cameroon, Africa by the name of Prima Dee-lite Plastics and the same manufactures PMF and HDPE Woven Sack Bags
for sale in Cameroon.
This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here
http://flevy.com/browse/business-document/activity-based-costing-198
Activity Based Costing (ABC) analysis is a methodology for assigning costs to those activities that truly drive these costs. It is more accurate than traditional costing methods. It is a valuable technique to know for a number of key reasons:
* ABC allows you to develop a picture of the true profitability of product lines, customer segments, distribution channels, geographies, and other market segments.
* ABC aids in a number of strategic decisions, from determining target markets to selecting the optimal product mix to making informed pricing decisions.
Specifically, ABC leads to a more accurate assignment of costs to cost objects through a process of:
* Matching the logical flow of costs through the cost system to the economics of true cost flows.
* Mapping costs from "resources" ( wages paid, supplies purchased) to activities performed ( units manufactured) to cost objects ( products, customers, distribution channels) that drive those costs.
ABC is an invaluable tool for making strategic decisions, as it allows you to develop a picture of true profitability of product lines, customer segments, geographies, distribution channels, and other markets. This document explains a 7-phase approach to Activity Based Costing and includes examples.
Activity Based Costing (ABC) analysis is a methodology for assigning costs to those activities that truly drive these costs. ABC is an invaluable tool for making strategic decisions, as it allows you to develop a picture of true profitability of product lines, customer segments, geographies, distribution channels, and other markets.
To view and download the full document, please go here:
http://learnppt.com/powerpoint/68_Activity-Based-Costing.php
For more business strategy frameworks, check out this page:
http://learnppt.com/business-strategy.php
http://learnppt.com/powerpoint/frameworks/
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Activity-Based Costing
Allocates overhead to multiple activity cost pools, and Assigns the activity cost pools to products or services by means of cost drivers.
Complex manufacturing processes may require multiple allocation bases; this approach is called Activity-Based Costing
Activity-based costing (ABC) is a method of assigning overhead and indirect costsâsuch as salaries and utilitiesâto products and services. The ABC system of cost accounting is based on activities, which are considered any event, unit of work, or task with a specific goal.
ACtivItY BaSeD CostinG, Value ChAin AnalysiS, TargeT cosTing & Life Cycle Cos...Sonu Sah
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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.
Ethnobotany and Ethnopharmacology:
Ethnobotany in herbal drug evaluation,
Impact of Ethnobotany in traditional medicine,
New development in herbals,
Bio-prospecting tools for drug discovery,
Role of Ethnopharmacology in drug evaluation,
Reverse Pharmacology.
The Art Pastor's Guide to Sabbath | Steve ThomasonSteve Thomason
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What is the purpose of the Sabbath Law in the Torah. It is interesting to compare how the context of the law shifts from Exodus to Deuteronomy. Who gets to rest, and why?
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
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http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasnât one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
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This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as âdistorted thinkingâ.
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
How to Create Map Views in the Odoo 17 ERPCeline George
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The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
10. Overhead Costs Total budgeted cost = $3,894,000 Activity Cost Pools Machinery cost pool $1,212,600 Setup cost pool $3,000 Engineering cost pool $700,000 Facility cost pool $507,400 Unit Level Batch Level Product- Sustaining Level Facility Level Identification of Activity Cost Pools Activity must be done on each unit produced. Activity performed on each batch produced. Activities needed to support an entire product line Activity required in order for the production process to occur.
11. Receiving/Inspection cost pool $200,000 Material-Handling cost pool $600,000 Quality-Assurance cost pool $421,000 Packaging/Shipping cost pool $250,000 Machinery cost pool $1,212,600 Setup cost pool $3,000 Engineering cost pool $700,000 Facility cost pool $507,400 Unit Level Batch Level Product- Sustaining Level Facility Level
13. Machinery Cost Pool Total budgeted cost = $1,212,600 Activity cost pool STAGE ONE Various overhead costs related to machinery Maintenance Depreciation Computer Support Lubrication Electricity Calibration
14. Calculate the pool rate Budgeted Machinery Costs $1,212,600 Budgeted Machine Hours 43,000 $28.20/hour Cost Assignment STAGE TWO = =
15. Calculation of total setup cost Setup Cost Pool Total budgeted cost = $3,000 Activity cost pool STAGE ONE
16. Calculate the pool rate Budgeted Setup Costs $3,000 Planned Production Runs 15 runs $200 per run Cost Assignment STAGE TWO = =
17. Various overhead costs related to engineering Engineering salaries Engineering supplies Engineering software Depreciation Engineering Cost Pool Total budgeted cost = $700,000 Activity cost pool STAGE ONE
18. Allocate based on engineering transactions Cost Assignment STAGE TWO Engineering Cost Pool Total budgeted cost = $700,000
19. Various overhead costs related to general operations Plant depr. Plant mgmt. Plant maint. Property taxes Insurance Security Facility Cost Pool Total budgeted cost = $507,400 Activity cost pool STAGE ONE
20. Budgeted Facilities Cost $507,400 Budgeted Direct-Labor Hours 118,000 $4.30/hour Cost Assignment STAGE TWO = = Calculate the pool rate
31. COLLECTING ABC DATA INTERVIEWS AND PAPER TRAILS - The information for ABC systems initially comes from interviews with employees in the support departments and a review of each departmentâs records. STORYBOARDING - A procedure used to develop a detailed process flow chart, which visually represents activities and the relationships among activities. MULTIDISCIPLINARY ABC PROJECT TEAMS â To gather information from all facets of an organizations operations, it is essential to involve personnel from a variety of functional areas. A typical ABC project team includes ACCOUNTING, FINANCE, PRODUCTION, OPERATIONS, ENGINEERS, MARKETING etc.
34. Activity-Based Management Activity-based costing establishes relationships between overhead costs and activities so that we can better allocate overhead costs. Activity-based management focuses on managing activities to reduce costs.
42. Customer Profitability Analysis Customer profitability analysis uses activity-based costing to determine the activities, costs, and profit associated with serving particular customers.
43. Customer Profitability Analysis Orders small quantities. Orders frequently. Often changes orders. Required special packaging. Demand fast service. A costly customer
44. Customer Profitability Analysis A company may use these customer related costs to help determine the profitability of each customer.
45. Customer Profitability Analysis 75% of actual operating income 50% of actual operating income 25% of actual operating income
50. Key Features of the JIT Approach Smooth, uniform production rate Pull method of production Purchase is small lot sizes Quick, inexpensive setups High quality materials Effective preventive maintenance Teamwork Multiskilled workers
51. JIT Purchasing Long-term contracts with suppliers. Only a few suppliers. Parts delivered in small lots. Minimal inspection of materials. Grouped payments to vendor.