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United Parcel Service Jeremy Gogel 3-2-2006 Finance 4201 World's Largest Package Delivery Company Largest shipment/logistic company in the world...

Hi, 

 can I request a PPT presentation on overhead costs regarding machine hours, purchasing materials and setting up machine. Basically all costs allocated to those 3 things. It needs to be about 5 minutes long so maybe 3-4 slides and I will introduce UPS in the first slide. 

Attached you will find the case analysis I had to write, and the PPT I would like you to work around :)

Thanks in advance

Please don't hesitate to ask any further questions

United Parcel Service Jeremy Gogel 3-2-2006 Finance 4201
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2 World’s Largest Package Delivery Company Largest shipment/logistic company in the world Headquartered in Sandy Springs, Georgia Deliver 13.6 million packages daily (150 packages per second) Operates with own airline Reaches more than 200 countries/territories worldwide Every address in the United States Over 88,000 vehicles Employees: 397,000 (2012) Revenue: $54.1 billion (2012)
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Gila Saroyan Activity Based Costing – UPS April 18, 2016 ACCT Activity based costing is an effective and advanced method of costing used in accountancy. It not only provides accurate financial results but also generates information for forecasting as well as decision making. The United Parcel Service is a well-known company in the US and it has implemented the ABC system of accounting. The company is one of the largest companies which provide shipping and logistics services; it has expanded over the years and is now one of the most successful companies of all times. UPS has various costs that it incurs on an everyday basis and these costs sometimes fall into one category if the traditional system of costing is applied. Hence, the ABC uses a detailed bifurcation between different costs such as machine setup, delivery time and the distance for delivery. Since these costs form a part of the total costing of a business, UPS can ideally use this information for the pricing of its services. Under the traditional costing system, these costs would fall under one head and would then have to apply to the total number of service provided. Instead, here the costs are distributed into an activity pool with the total activity carried out and the same can be divided with the service provided. This enables the company to gain adequate information for the product pricing. Since the cost of each service is available, the company can also add a profit margin and then determine the price for service. With the implementation of ABC, the customers’ demands and its diversity could be met and the company could reach to new horizons. When you actually make a comparison between the costing with ABC and without ABC, you will be able to see a vast difference between the costing and the way it is assigned to
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each service. The costing per service will be accurate and will generate the right amount of information you need when pricing a service. The implementation of ABC was tough because of the resistance to change from the employees of the company. But the company successfully managed to bring about acceptance towards the new system and removed the traditional method of accounting. The implementation of ABC begins with the acceptance of a change in the current system. For the managers, it requires communication and leadership to establish a new system and eliminate the current one completely. The system of ABC costing determines the cost of a particular product or service based on an activity which is carried out in the process. The process of production is divided into various activities and the cost of each activity is set out on the cost pool and determined against the number of units produced. For this to happen the company needs to separate the various activities involved in the process and the cost for the same be determined accordingly. Once the total cost of an activity is estimated, the unit cost for the same can be established. [ CITATION Act09 \l 1033 ] ABC costing helped UPS in the pricing for its services; it also helped them in performance measurement and customer measurement. The company could use the information for the performance measurement because they would know the time and cost per delivery and the number of services offered in a day. Performance measurement helped UPS in determining the incentives and the bonus of the employees. Traditional method of costing does not provide adequate information for performance measurement because there are no effective ways to measure expect for the time and output method. While ABC enables performance measurement using the information generated for the completion of each service. In addition, the company was also able to forecast and plan efficiently for the future. The long term benefits of ABC are
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CostAcctUPS.ppt

United Parcel Service
Jeremy Gogel
3-2-2006
Finance 4201 World’s Largest Package
Delivery Company
• Largest shipment/logistic company in the world
• Headquartered in Sandy Springs, Georgia...

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