Developing and Implementing an Activity-Based Costing System (2016)
Learn to Create, Develop, Implement, Maintain and Sustain an Effective ABC Costing System and Activity-Based Management
Activity-based cost management systems have evolved in response to significant changes in the competitive business environment faced by both service and manufacturing firms. The overall objective of an activity-based cost management system is to improve the quality, content, relevance, and timing of cost information. Generally, more managerial objectives can be met with an activity-based system than with a functional-based system.
An activity-based cost accounting system emphasises tracing over allocation. The role of driver tracing is significantly expanded by identifying drivers unrelated to the volume of product produced (called non-unit-based activity drivers). The use of both unit- and non-unit-based activity drivers increases the accuracy of cost assignments and the overall quality and relevance of cost information. A cost accounting system that uses both unit- and non-unit-based activity drivers to assign costs to cost objects is called an activity-based cost (ABC) system.
Activity-based management is the heart and soul of a contemporary operational control system. Activity-based management (ABM) focuses on the management of activities with the objective of improving the value received by the customer and the profit received by the company in providing this value. It includes driver analysis, activity analysis, and performance evaluation and draws on ABC as a major source of information.
By completing this course you will be able to create, develop, implement, maintain and sustain an effective ABC system and Activity-Based Management in order to improve your product/service costing accuracy, support decisions about pricing, add or delete items from the product portfolio, choose between outsourcing and in-house production, and evaluate process improvement initiatives.
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