ch12tcShrt - COST MANAGEMENT Accounting & Control...

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COST MANAGEMENT 1 Hansen▪Mowen▪Guan Chapter 12 Activity-Based Management
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2 Study Objectives 1. Describe how activity-based management and activity-based costing differ. 2. Define process value analysis. 3. Describe activity-based financial performance measurement. 4. Discuss the implementation issues associated with an activity-based management system. 5. Explain how activity-based management is a form of responsibility accounting, and tell how it differs from financial-based responsibility accounting.
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3 The Relationship of Activity-Based Costing and Activity-Based Management Activity-based management (ABM) is a Systemwide, integrated approach Focuses management’s attention on activities with the objectives of improving Customer value The profit achieved by providing this value ABC is the major source of information for activity-based management.
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4 The Relationship of ABC and ABM
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5 Process Value Analysis Process value analysis Fundamental to activity-based responsibility accounting Focuses on accountability for activities rather than costs Emphasizes the maximization of system-wide performance instead of individual performance Process value analysis is concerned with: Driver analysis Activity analysis Performance measurement
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6 Process Value Analysis Driver analysis is the effort expended to identify the factors that are the root causes of activity costs. Activity analysis
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ch12tcShrt - COST MANAGEMENT Accounting & Control...

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