managerial – abc – sept 28
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managerialTRANSCRIPT
Managerial – ABC – Sept 28
ABC – 7 steps
1) Identiffy different activities (cost pools)2) Determine basis for assigning the cost of activities to cost objects> cost driver
- They have now got a new automated system for ordering , easier and less labour intensive- Shipping system and excellent customer service. Expensive to bring to desk
o Charging 2% for desk delivery, may or may not cover expenses- Cost driver – logical and quantifiable link between activities performed
Warehousing costs
- Cost driver would be # of cartons
Individual costs
Process manual orders
- # of items per order, or # of orders
Process EDI (electronic order)
- # of orders
Commercial delivery
- # of cartons shipped
Desk top deliveries
- # of deliveries
3) Assign total estimated costs or resources to each activity poolExhibit 1OH :Warehouse personal 2.4MWarehouse expenses 2MFreight: .45MDelivery Truck Expenses: .2MOrder entry expenses: .8MTotal OH = 5.85MWe are trying to better allocate these numbers10% of 2.4M was for desktop delivery, then plus .2M for delivery expenses
4) Determine the practicle calacity for the cost driver base (the denominator)