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    Activity Based Costing

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    ashish6784
    This document provides an overview of activity-based costing (ABC). It discusses how ABC refines traditional costing systems by tracing costs to products and services using cost pools and allocation bases. The methodology involves identifying and classifying activities, estimating activity costs, calculating cost driver rates, and assigning costs. ABC also analyzes costs at multiple levels and requires clear objectives, management support, cross-functional teams, and sufficient implementation time.

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    Activity Based Costing

    Uploaded by

    ashish6784
    44 views8 pages
    This document provides an overview of activity-based costing (ABC). It discusses how ABC refines traditional costing systems by tracing costs to products and services using cost pools and allocation bases. The methodology involves identifying and classifying activities, estimating activity costs, calculating cost driver rates, and assigning costs. ABC also analyzes costs at multiple levels and requires clear objectives, management support, cross-functional teams, and sufficient implementation time.

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    ABC

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    This document provides an overview of activity-based costing (ABC). It discusses how ABC refines traditional costing systems by tracing costs to products and services using cost pools and allocation bases. The methodology involves identifying and classifying activities, estimating activity costs, calculating cost driver rates, and assigning costs. ABC also analyzes costs at multiple levels and requires clear objectives, management support, cross-functional teams, and sufficient implementation time.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    44 views8 pages

    Activity Based Costing

    Uploaded by

    ashish6784
    This document provides an overview of activity-based costing (ABC). It discusses how ABC refines traditional costing systems by tracing costs to products and services using cost pools and allocation bases. The methodology involves identifying and classifying activities, estimating activity costs, calculating cost driver rates, and assigning costs. ABC also analyzes costs at multiple levels and requires clear objectives, management support, cross-functional teams, and sufficient implementation time.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
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    ABC

    Activity Based Costing


    Introduction
    • Choice of Cost System – Costs and
    Benefits
    • Refining Traditional Costing System
    -Tracing to Products/Services
    - Cost Pools
    - Cost allocation base
    • ABC Costing method
    ABC Methodology
    • Usage by Companies
    • Purpose of usage
    • Steps
    -Identify and Classify activities
    -Estimate the cost of activities
    -Calculate cost driver rate
    -Assign activity costs to products/services
    Five Level Hierarchy
    • Classification objectives
    • Five level hierarchy
    Unit Level
    Batch Level
    Product Level
    Customer Level
    Facility Level
    Methods for Identification and
    Classification
    • Top Down
    • Participative
    • Recycling
    • Product Profitability
    • Customer Profitability
    Requirements for Successful
    Implementation
    • Objectives are clear and tangible
    • Top Management support
    • Cross functional management team have
    project management skills
    • The team learns from other companies’
    experience
    • Communication is regular and honest
    • Sufficient time is allowed to gather and
    analyze data
    Others
    • Estimation of Costs of New products
    • ABC in Service Industry
    • Costs and Benefits of using ABC
    • Need for Choosing ABC
    red flags
    -Significant Indirect Costs
    -Complex Goods and services
    -Standard High Volume vs Complex Low volume
    -Belief that costs are not distributed properly
    -Loses bids when quoting low and wins despite higher quoting
    -No changes in costing system despite major changes in operations

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