Introduction to Activity Based Costing (ABC)
Internet ABC Online Presentation
This page and this presentation are created by Narcyz Roztocki.
Table of Contents
Activity Based Costing (ABC)
A typical situation in a small manufacturing firm
Common beliefs
Reality
Why is a new cost management system needed?
Why is the knowledge of the “true” cost of a product so important
?
Why is the knowledge of the “true” cost of a product so important
? (cont)
Major factors for determination of market price
Ways to determine object cost
Total cost for a cost object
Traditional Cost Accounting (TCA)
TCA in a company
TCA in a company (cont)
Activity Based Costing (ABC)
ABC Basic Premise
When to use ABC
ABC Steps
ABC Illustration 1. Identify activities
ABC Illustration 2. Determine activity cost
ABC Illustration 3. Determine cost drivers
ABC Illustration 4. Activity data
ABC Illustration 5. Product cost calculation
Product cost TCA vs. ABC
Summary of ABC approach