Activity Primarily based Costing for Activity Based Management
Meiklejohn Paul, Director Management Consulting 17 Feb 2012
1 . Precisely what is Activity Based Costing (ABC)? 1 . you What is FONEM and So why should it be applied? 1 . a couple of Traditional costing vs DASAR 1 . three or more Activity centered costing techniques 2 . How ABC ought to be used to manage (Activity structured management)? 2 . 1 When should you use FONEM? 2 . two How to use ABC for ABM? 2 . several Scoring High - Low value adding activities installment payments on your 4 Activity Based Management applications 3. ABC/ABM implementation 3. you Where ABC has been utilized 3. a couple of Steps to develop ABC Cost Flow Unit 3. a few ABC Rendering Project three or more. 3 Challenges and success factors Appendix: KPMG HURUF and Expense Optimisation tools
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1 ) What is Activity Based Costing? 1 . 1 What is ABC and So why should it be taken? What is DASAR? (the Definition)
ABC (Activity Based Costing) is a technique for measuring the cost and performance of activities, product or service on the basis of the time consumed by various actions which produce that services or products. Products and services per do not trigger costs to incurred. Rather work itself consumes solutions which in turn incur costs.
Why it should be utilized? (the Benefits)
• Getting cost and operational details to the level needed for administration decisions • Gaining firmer control over expense and indirect costs • Pricing products/services more accurately • Establishing groundwork for activity-based management and performance measurement • Promoting a consistent improvement construction and attitude
To put DASAR into framework as a efficiency management instrument
© 2012 KPMG Limited, a Vietnamese limited liability company and a member company of the KPMG network of independent affiliate firms associated with KPMG International Cooperative (" KPMG International”), a Swiss entity. Almost all rights arranged.
1 ) What is Activity Based Charging? 1 . 2 Traditional Charging vs HURUF - The notion Traditional Being Activity Centered Costing
Useful resource Drivers Amount Related Basis
Takes on that costs vary with models produced
Activities consume resources/costs Products/Services consume different levels of activities 3
© 2012 KPMG Limited, a Vietnamese llc and a member firm of the KPMG network of independent member organizations affiliated with KPMG International Supportive (" KPMG International”), a Swiss organization. All privileges reserved.
1 ) What is Activity Based Being? 1 . 2 Traditional Costing vs FONEM – Characteristic comparison Activity Based Being
DASAR focuses on actions in the production or perhaps service delivery process.
Focus on the cost of the product only. Costs are followed to the product on supposition that resources are used in proportion for the volume created. Simpler In the past: • Small number of products/services which will did
• Costs will be traced to activities to products/services, centered Key within the demand for these types of activities throughout the features production/delivery process. • •
More complex More accurate product and service costs enable better strategic decisions regarding: • Product/service prices • Product/service mix. • Make vs buy decision •
not differ much in terms of required manufacturing support.
• Labor was major component inside the cost
• Purchases of R& M, process software • Cost control
Increased visibility from the activities performed enables a company to: • Focus more on the supervision of actions, such as
enhancing the effectiveness of high cost activities.
• Identify and minimize non-value added activities •
ABC could be expensive to work with...