Activity based costing - Revision history

Dirkjan at 19:23, 27 August 2020

2020-08-27T19:23:20Z

Dirkjan: Replaced content with "Activity based costing Category:finance Category:M9 Category:Term"

2020-08-27T18:38:29Z

Replaced content with "Activity based costing Category:finance Category:M9 Category:Term"

Dirkjan: Created page with "Activity Based Costing (ABC) is an alternative to the traditional way of accounting Traditionally it is assumed that high volume customers are profitable customers. A loyal cu..."

2020-08-25T07:21:19Z

Created page with "Activity Based Costing (ABC) is an alternative to the traditional way of accounting Traditionally it is assumed that high volume customers are profitable customers. A loyal cu..."

New page

Activity Based Costing (ABC) is an alternative to the traditional way of accounting Traditionally it is assumed that high volume customers are profitable customers. A loyal customer is also a profitable customer. And profits will follow a happy customer. Studies about customer profitability have unveiled that the above ideas are not necessarily true. ABC is a costing model that identifies the cost pools, or activity centers, in an organization. It assigns costs to products and services (cost drivers),based on the number of events or transactions that are taking place in the process of providing a product or service. As a result, Activity Based Management can support managers to see how shareholder value can be maximized and how corporate performance can be improved.

<html>
<img src="/static/files/MBI/Module%209/picture_activity_based_costing.gif" width=500>
</html>

Typical benefits of Activity-Based Costing:
* Identify the most profitable customers, products and channels.
* Identify the least profitable customers, products and channels.
* Determine the true contributors to- and detractors from- financial performance.
* Accurately predict costs, profits and resources requirements associated with changes in production volumes, organizational structure and costs of resources.
* Easily identify the root causes of poor financial performance.
* Track costs of activities and work processes.
* Equip managers with cost intelligence to stimulate improvements
* Facilitate a better [[Marketing Mix|Marketing Mix]]
* Enhance the bargaining power with the customer.
* Achieve better Positioning of products

[[Category:finance]]

[[Category:M9]]

[[Category:Term]]

← Older revision		Revision as of 18:38, 27 August 2020
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−	Activity Based Costing (ABC) is an alternative to the traditional way of accounting Traditionally it is assumed that high volume customers are profitable customers. A loyal customer is also a profitable customer. And profits will follow a happy customer. Studies about customer profitability have unveiled that the above ideas are not necessarily true. ABC is a costing model that identifies the cost pools, or activity centers, in an organization. It assigns costs to products and services (cost drivers),based on the number of events or transactions that are taking place in the process of providing a product or service. As a result, Activity Based Management can support managers to see how shareholder value can be maximized and how corporate performance can be improved.	+	Activity based costing
−
−	~~<html>~~
−	~~<img src="/static/files/MBI/Module%209/picture_activity_based_costing.gif" width=500>~~
−	~~</html>~~
−
−	~~Typical benefits of Activity-Based Costing:~~
−	* Identify the most profitable customers, products and channels.
−	* Identify the least profitable customers, products and channels.
−	* Determine the true contributors to- and detractors from- financial performance.
−	* Accurately predict costs, profits and resources requirements associated with changes in production volumes, organizational structure and costs of resources.
−	* Easily identify the root causes of poor financial performance.
−	* Track costs of activities and work processes.
−	* Equip managers with cost intelligence to stimulate improvements
−	* Facilitate a better [[Marketing Mix\|Marketing Mix]]
−	* Enhance the bargaining power with the customer.
−	* Achieve better Positioning of products
−
	[[Category:finance]]		[[Category:finance]]

← Older revision		Revision as of 19:23, 27 August 2020
Line 1:		Line 1:
−	Activity based ~~costing~~	+	Activity Based Costing (ABC) is an alternative to the traditional way of accounting Traditionally it is assumed that high volume customers are profitable customers. A loyal customer is also a profitable customer. And profits will follow a happy customer. Studies about customer profitability have unveiled that the above ideas are not necessarily true. ABC is a costing model that identifies the cost pools, or activity centers, in an organization. It assigns costs to products and services (cost drivers),based on the number of events or transactions that are taking place in the process of providing a product or service. As a result, Activity Based Management can support managers to see how shareholder value can be maximized and how corporate performance can be improved.
		+
		+	<html>
		+	<img src="/static/files/MBI/Module%209/picture_activity_based_costing.gif" width=500>
		+	</html>
		+
		+	Typical benefits of Activity-Based Costing:
		+	* Identify the most profitable customers, products and channels.
		+	* Identify the least profitable customers, products and channels.
		+	* Determine the true contributors to- and detractors from- financial performance.
		+	* Accurately predict costs, profits and resources requirements associated with changes in production volumes, organizational structure and costs of resources.
		+	* Easily identify the root causes of poor financial performance.
		+	* Track costs of activities and work processes.
		+	* Equip managers with cost intelligence to stimulate improvements
		+	* Facilitate a better [[Marketing Mix\|Marketing Mix]]
		+	* Enhance the bargaining power with the customer.
		+	* Achieve better Positioning of products
		+
	[[Category:finance]]		[[Category:finance]]