Activity-Based Cost Management
Author: Gary Cokins
||2 hours for CPAs
Today an emerging focus is to become a “learning organization.” Unlike traditional accounting reports to which managers react by being happy or sad, ABC data makes them smarter!
Critics have claimed that traditional managerial accounting is at best useless and at worst dysfunctional and misleading. Today’s general ledger and budgeted spending systems support departmental and “stovepipe” managerial philosophies. In contrast, activity-based costing (ABC) information supports process-based thinking. ABC is a key component of the increasingly popular enterprise and corporate performance management (EPM/CPM) systems.
ABC also helps reduce costs and improve productivity by reporting per-unit costs that can be used as benchmarks and to monitors cost trends. ABC can also associate costs with value, quality, and waste, with their strategic importance, with their level of performance, and other “attributes” of work. All of this cost and trait data are further translated into which products, channels, customers or internal company-sustaining workforce staff cause and consume all of the resources......and in exactly what proportions.
Publication Date: March 2017
CFOs, Financial officers and controllers, Managerial and cost accountants, Financial and business analysts, Budget managers, Strategic planners, Marketing and sales managers, Supply chain analysts Risk managers, CIO and information technology staff, and Board of Directors.
- Best Practices & Procedures of ABC
- How ABC can bring truly accurate fact-based measures and visibility to costs
- Measure channel and customer profitability
- Discover how to reduce costs and improve productivity
- Integrate ABC data into your organization
- Recognize how there is a continuum of "direct costing"
- Describe which trends have caused interest in ABC/M
- Identify how ABC complies with costing's "causality principle"
- Calculate profit and loss statements for customers displaying profit margin layers
- Recognize how to perform "predictive accounting" for capacity-sensitive driver-based budgets / rolling financial forecasts, what-if analysis, and outsourcing decisions
- Identify how to imbed statistics and analytics into product, service-line, channel, and customer profitability analysis
- Differentiate how to overcome implementation barriers to ABC/M such as behavioral resistance to change and fear of being held accountable
- Identify how to trace indirect costs in your organization
- Utilize ABC in your company and the types of costs which apply to this method
- Recognize the most effective ways to keep costs from piling up within the ABM model
- Identify when to use rapid prototyping with iterative remodeling
- Differentiate when to use ABC within your organization
NASBA Field of Study
Finance (2 hours)