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Business
Solution Services /
Activity Based Costing & Management
How are your
products or services costed?
Do
you accumulate the costs of the tasks involved by department,
and then apply general overheads?
Or do you use activity based costing to produce process costs,
and apply process consumption metrics to derive product or service
costs?
Activity Based
Costing (ABC) has been in wide use in manufacturing industries for
many years, it can be readily applied to service industries. It
is particularly appropriate for E-business because it is process
and service line oriented. It is very effective after sustained
growth, when process understanding can decrease due to complexity
and increasing functional organisation.
Activity Based Management (ABM) is the application of ABC results
for process and profit improvement. ABM will generate a number of
improvement initiatives and give you a much clearer view of the
profitability of your product or service line offerings, which in
turn will fundamentally impact your business strategies.
Whilst your finance people should be involved in any ABC project,
it is essential that a business owner drive any ABC or ABM initiative.
This is because although ABC uses dollars for presentation, it is
only as good as the understanding of the business processes and
resource consumption drivers, which are best understood by your
business people. Teams should be formed from mixed disciplines.
ABM Cycle
If
you do not have ABC and ABM you definitely need it now! Talk
to Stratege.
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