Chapter 5 PPT - Chapter 5 Activity-Based Management and...

Info iconThis preview shows pages 1–16. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5 Activity-Based Management and Activity-Based Costing Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn Learning Objectives (1 of 2) • Identify the focus of activity-based management • Explain why non-value-added activities cause costs to increase unnecessarily • Explain why cost drivers are designated in activity-based costing Learning Objectives (2 of 2) • Contrast activity-based costing to the traditional cost accounting system • Describe the types of information provided by an activity-based costing/management system • Explain when it is appropriate to use activity-based costing Activity-Based Management • Focuses on activities during production and performance process • Improves the value received by customers • Enhances profitability Activity An activity is a repetitive action performed in fulfillment of a business function Activity-Based Management Activity analysis Cost driver analysis Activity-based costing Continuous improvement Operational control Quality management Business process improvement Performance measurement Activity Based Management • External Benefits – Increased customer value – Enhanced profitability • Internal Benefits – More efficient production – More accurate cost determination – More effective performance evaluation ABM Activity Analysis Value-added activity • Increases worth of product or service to a customer • Customer is willing to pay for it Non-value-added activity • Increases time spent on product or service but does not increase worth • Unnecessary from customer perspective • Can be reduced, redesigned or eliminated without affecting market value or quality • Business-value-added activities are essential ABM Process • A process is a series of activities that, when performed together, satisfy a specific objective – Production – Distribution – Selling – Administration Activity Analysis • Create a Process Map (detailed flowchart) for each process – Identify each step ABM Activity Analysis • Create a Process Map (detailed flowchart) for each process – Identify each step • Create Value Chart – Identify stages and time spent in stages from beginning to end of process Value-Added Processing Time Service Time Non-Value-Added Inspection Time Transfer Time Idle Time ABM Cycle Time...
View Full Document

This note was uploaded on 03/23/2010 for the course ACC_ 03 taught by Professor Zeegal during the Fall '10 term at Missouri State University-Springfield.

Page1 / 48

Chapter 5 PPT - Chapter 5 Activity-Based Management and...

This preview shows document pages 1 - 16. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online