...cz Abstract Paper analyses the specifics of the application of Activity-Based Costing method in hospital management. Primary objective of the paper is to outline the methodology of the ABC application in hospitals. First part of the paper analyzes the ways of ABC implementation in published foreign studies. Second part describes the individual steps in ABC application and discusses the differences in the application procedures between the manufacturing and hospital organization. Key words: Healthcare Management, Cost Management, Activity-based costing, Introduction In the last decade, many non-profit and hospital organizations started to face difficulties and challenges in balancing limited resources and costs to provide their demand for services. Due to the introduction of modern medical techniques and medicines and consequent increase of consumed costs, many hospitals are under pressure to adopt more advanced cost management techniques usually utilized only in profit organization sector. Hospital managers frequently seek the advanced techniques, for better understanding of relations between the cost and provided services. One of the key factors of effective company management is ability of accurate estimation of the cost of products. Product costing is an essential economic tool used to quantify the cost of individual interventions carried out. The need for an accurate method of costing in hospital organizations is frequently emphasized by many authors. Gujral et al...
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...supports continuous learning and improvement activities and | | |serves as a linkage between strategy and execution of that strategy. | |Learning outcomes |At the end of this course, students are able to: | | |Compare and explain about costs and the best ways to make better decisions in the selection of products, price and investments. [C4] | | |Prepare and produce a budget, understand chain processes and apply the said techniques. [P4] | | |Utilise strategic costing, understand and implement ways to review inventory and quality, and...
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...* Traditional Costing * * Under Traditional Costing, all operating expenses are allocated by percent of sales. This causes the larger segments to carry more cost automatically. For Southlake, Textbooks generate the most income, however the gross profit percentage is only 26%. Clothing has one of the best gross profits and generates the 2nd most income. With traditional costing, computers are operating at a loss. Under Traditional Costing, all operating expenses are allocated by percent of sales. This causes the larger segments to carry more cost automatically. For Southlake, Textbooks generate the most income, however the gross profit percentage is only 26%. Clothing has one of the best gross profits and generates the 2nd most income. With traditional costing, computers are operating at a loss. ABC Costing * When allocating the operating costs based on cost driver rather than percentage of sales the segments performance differs. Depending on management’s choice of cost driver, results will vary. We allocated all costs to each product line but used different drivers. Under ABC costing, less cost is allocated to the biggest segment, textbooks. Textbooks still create the most income, but both supplies and computers are operating at a loss. When allocating the operating costs based on cost driver rather than percentage of sales the segments performance differs. Depending on management’s choice of cost driver, results will vary. We allocated all costs to each...
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...usually underestimates costs for low-volume products or services and over-estimates costs of high-volume products or services. To avoid such situations Activity Based Costing (ABC) system was developed. ABC system main principle is to identify main activities of the company, group costs of these activities, identify how these activities can be measured and assign costs to products or services though these measures. ABC system helps managers to allocate costs more accurate to final products or services. However, ABC system has some limitations. For ABC implementation company needs a lot of resources (trained personnel, additional IT and information resources). Some of the potential users are often change their mind of ABC implementation after expenses for system implementation and maintenance are calculated. Other disadvantage is the complexity of the system. Implementation of ABC system could be highly complex if company has a lot of products and need to allocate its costs to a number of activities. Support and maintenance of such systems is complicated and time consuming process. ABC system gathers and provides valuable information for decision making. This approach is called Activity Based Management and could be used to improve efficiency of the company. Notwithstanding its limitations, recent surveys confirm that ABC system is useful and used in a number of small and big companies around the world. Introduction In highly competitive world where information about products and...
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...Coverdrive Ltd Case Study: Activity Based Costing Situation At a recent management meeting at Coverdrive Ltd, the members of the senior management team discussed the introduction of a new product to the company’s range of high quality, hand made cricket bats. A major agenda item was pricing. The management accountant, since his appointment, had given much thought to pricing policy and one of his concerns was that of dealing with the recovery of overhead within a full cost pricing policy. The discussion centred around the traditional method currently in use, compared and contrasted with ABC, Activity Based Costing a technique which re-examines the problem that has faced accountants for decades – that of allocation and absorption of overhead. Traditional pricing method has been based upon absorption costing and the treatment of overhead usually followed a set procedure. ( Cost centres are identified and established within the organisation. ( Cost centres may be producing or service centres. ( Wherever possible a direct charge is made to a cost centre ie allocated overhead. ( Where overhead is jointly incurred it is apportioned to the cost centres on an equitable base. ( The overhead cost for the service centre is then transferred to producing centres. ( The total overhead cost for each producing centre is then divided by for example, machine or labour hours per the cost centre. ( An overhead recovery rate results. ( This is then used to...
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...November 7, 2012 Writing Assignment 2 ABC Costing 1. Briefly describe the ABC system adopted in Super Bakery. The ABC system implemented by Super Bakery was done to separate costs by customer instead of allocating overhead evenly across the entire customer base. Their reason for doing this was simple; they wanted to see how profitable each customer was. In the nature of this business, it is described in the article that “…very few customers’ orders consume the same amount of resources.” (Davis 4) Because of this reason, different customers produced different amounts of profits, and this is one reason that Super Bakery adopted an ABC system. Another reason this company adopted the ABC system was to track outside contractors. The business is a virtual corporation, and the people who work for them often have the power to make more decisions. If they are too free to make these decisions on their own, it often happens that they try to do certain things with money to make their job easier. While doing this, it could be hurting the virtual company at the same time. With an ABC system in place, the type of spending brokers, contractors, and other outside workers is monitored closer and can be tracked more easily. 2. Do you think it is necessary to adopt an ABC system in Super Bakery? Why or why not? What are the benefits/costs? I believe that with this type of business, it is absolutely necessary to have an ABC system in place. Because of the way this business...
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...ACTIVITY-BASED COSTING Activity-Based Costing (ABC) adalah suatu sistem informasi akuntansi yang mengidentifikasi berbagai aktivitas yang dikerjakan dalam suatu organisasi dan mengumpulkan biaya dengan dasar dan sifat yang ada dan perluasan dari aktivitasnya. ABC memfokuskan pada biaya yang melekat pada produk berdasarkan aktivitas untuk memproduksi, mendistribusikan atau menunjang produk yang bersangkutan. Sistem ABC timbul sebagai akibat dari kebutuhan manajemen akan informasi akuntansi yang mampu mencerminkan konsumsi sumber daya dalam berbagai aktivitas untuk menghasilkan produk secara akurat. Hal ini didorong oleh: 1. Persaingan global yang tajam yang memaksa perusahaan untuk cost effective 2. Advanced manufacturing technology yang menyebabkan proporsi biaya overhead pabrik dalam product cost menjadi lebih tinggi dari primary cost. 3. Adanya strategi perusahaan yang menerapkan market driven strategy Kelemahan sistem akuntansi biaya tradisional: a. Akuntansi biaya tradisional dirancang hanya menyajikan informasi biaya pada tahap produksi. b. Alokasi biaya overhead pabrik hanya didasarkan pada jam tenaga kerja langsung atau hanya dengan volume produksi. c. Ada diversitas produk, dimana masing-masing produk mengkonsumsi biaya overhead yang berbeda beda. Penerapan ABC sistem akan relevan bila biaya overhead pabrik merupakan biaya yang paling dominan dan multiproduk. Dalam merancang ABC sistem, aktivitas untuk membuat dan menjual produk digolonhkan dalam 4 kelompok...
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...148 86 ( DM+ TOTAL OVERHEAD ) Output Overhead Output QC Overhead QC Total overhead cost for each job Total hours Material Customer initited worked correction of house error TOTAL COST Profit for each 12 1778 9 777 11426 93 5400 2700 19526 -9926 12 1778 11 950 9341 81 3500 1100 13941 -4341 16 2371 8 691 13013 146 4500 17513 5487 4 593 4 345 5007 58 1800 6807 5193 4 593 4 345 4863 56 1500 6363 4637 4 593 6 518 5324 62 1500 6824 4176 8 1186 5 432 9537 110 3300 12837 10163 8 1186 6 518 10184 118 3400 13584 8416 8 1186 8 691 9522 110 3200 12722 7278 35 5187 33 2849 42896 457 13000 1000 1000 57896 -7896 4 593 4 345 5025 59 1800 6825 975 10 1482 9 777 8833 70 3100 1000 12933 -4933 6 889 4 345 8010 65 3900 1000 12910 -4910 4 593 5 432 6129 71 2100 8229 771 4 593 4 345 5842 68 2000 7842 1958 4 593 4 345 6160 72 2200 8360 2640 9 1334 7 604 8185 79 3600 1500 13285 -2285 8 1186 9 777 9425 110 3300 12725 7275 1 148 1 86 1607 19 600 2207 -207 3 445 1 86 2567 21 1000 500 4067 -2667 4 593 3 259 5973 70 2100 8073 -73 4 593 5 432 6290 74 2500 1000 9790 210 3 445 1 86 2219 20 1600 1000 4819 -819 1 148 1 86 2214 21 1700 3914 -1914 4 593 5 432 6336 75 2200 8536 3464 1 148 1 86 553 6 200 753 -753 TOTAL PROFIT...
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...SELECTION CRITERIA FOR IIMs/OTHER B-SCHOOLS FOR THE LAST YEAR/THIS YEAR IIM Kozhikode (last year) There is a 2 stage process of selection Stage1 A basic short listing done on the basis of percentile cut-offs in CAT is given below QA GEN SC/ST Stage2 In stage 2, an index score is computed with 50% weight for the overall CAT score, 20% weight for academic performance in secondary school, 20% weight for higher secondary school and 10% weight for the Work Experience of the candidate. The academic performance is taken as the percentage of marks reported by the candidates and is standardized across the board using the data available with IIMK for four years including the current year. In each category, the top ranking candidates based on this index score are called for further process. The following was the criteria used for final selection of candidate to PGP 2010-12 batch. Index score obtained in stage 2 of short listing for GD/PI - 50% Group discussion and social skills - 15% Personal interview - 25% Writing task (Essay) - 10% IIM Ahmedabad The selection of candidates for admission to the 2011-13 batch of the PGP at IIM Ahmedabad is a two-step process. In the first step, candidates are short-listed for personal interviews from among candidates who have a valid CAT/GMAT score who have applied for the programme and who satisfy the eligibility criteria for the programme. A non-overseas candidate who applies with a CAT score is required to perform well in all three sections in CAT to...
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...Using a conceptual framework in setting accounting standards Ian Dennis Business School Oxford Brookes University Abstract The paper examines the nature and role of a conceptual framework for financial reporting. Although much has been written about such frameworks and their purported role and the FASB and IASB are currently revising and converging their frameworks there are still questions about the kind of thing it is and how it is used in setting accounting standards. Using insights from the philosophical literature this paper considers the nature of the statements that appear in the chapters of the conceptual framework on objectives and qualitative characteristics. It then considers how these statements are used by standard setters in reasoning towards accounting standards. The kind of reasoning involved and the type of statements that are used in such reasoning is examined. The idea that some of the statements in the conceptual framework express desires that are to be fulfilled by financial reporting regulated by accounting standards is explored. These should be conceived as expressing general desires that are used in practical or instrumental reasoning towards accounting standards rather than as universal desires that enable the deduction of such standards. The need for the exercise of judgement in such reasoning is explored. The nature of the other statements in the conceptual framework is ambiguous. They are sometimes taken to be empirical statements about...
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...several other unique tactics, helped Super Bakery increase their sales and productivity in the years following. However, when implementing a virtual corporation, there are several risks involved which management was well aware of. The wide variety of costs involved with serving such a broad range of customers proved to be problematic. Super Bakery decided to implement an ABC costing system, whose main focus is capturing cost by customer order rather than by a specific product. Consumptions of costs are recorded directly when then occur, or through the use of cost drivers as needed. Super Bakery uses historical costs when actual costs or unavailable, and costs drivers when historical cost and direct costing are unattainable. Super Bakery uses specific responsibility centers for those functions they perform in house, and other arm’s length centers for outsourced activities. Through the use of the company’s relational database, Super Bakery is able to examine costs incurred by several different fields, and evaluate such costs based on profitability and performance of different parts of the business. B) The ABC system adopted by Super Bakery proved to be a necessary addition to help the company maximize their profits by enabling them to accurately control their costs. Prior to the implementation of the ABS system, many of the costs assigned to customers were not associated with their actual costs. The costs were being misrepresented because of the wide variety of customers and...
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...Activity-based & Process Costing Unit 3 (IP) AIU Online Virtual Campus 05-11-2012 Abstract The discussion on this paper will be about a ski company that is considering branching out their company by either buying or producing some manufactured goods to boost their business during the winter months. This ski company produces and sells an exceedingly victorious profile of water skis, but are studying about the most current intersect-country skis. If this company decides on obtaining the strip wanted or they can produce the bindings for their skis to switch them into snow skis for the winter then they would need to know whether they are gaining or losing profits for the company. If gaining the profits then the company will need to expand the business, but if losing the profits then they will need to go back to step one and look to see if they did not jump before the gun on a much bigger step than they should have taken. Activity-based & Process Costing A collection of techniques and tools can identify with how management’s decisions can affect costs through a cost management system (CMS). The CMS computes the organizations activities in performance and by the costs of resources, in order to access the change in costs in the business activities. This system can provide to your business an aggregate measure of inventory value and the manufactured cost of goods on the external reports that are submitted to the investors, creditors, plus other external stakeholders that...
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...Chapter 7 Activity-Based Costing and Management LEARNING OBJECTIVES Chapter 7 addresses the following questions: Q1 How is activity-based costing (ABC) different from traditional costing? Q2 What are activities, and how are they identified? Q3 What process is used to assign costs in an ABC system? Q4 How are cost drivers selected for activities? Q5 What is activity-based management (ABM)? Q6 What are the benefits, costs, and limitations of ABC and ABM? These learning questions (Q1 through Q6) are cross-referenced in the textbook to individual exercises and problems. COMPLEXITY SYMBOLS The textbook uses a coding system to identify the complexity of individual requirements in the exercises and problems. Questions Having a Single Correct Answer: No Symbol This question requires students to recall or apply knowledge as shown in the textbook. e This question requires students to extend knowledge beyond the applications shown in the textbook. Open-ended questions are coded according to the skills described in Steps for Better Thinking (Exhibit 1.10): Step 1 skills (Identifying) ...
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...Individual: Communication Paper Suzanne Beal BCOM/230 October 08, 2012 Hank Parisi First I want to take this opportunity to welcome you to ABC Accounting, Inc. I am very confident that you will follow in my footsteps to lead this team to success. I want to take this time and give you a few words of wisdom that I have acquired through the years to help you make this transition go as smoothly as possible. Your main responsibility here at ABC Accounting is to maintain a cohesive working team. One of the more challenging responsibilities will be introducing new employees to the team members. Here are some of the barriers that you could encounter and some suggestions for some possible solutions. One of the most common barriers that you will come across is what I call the no it all’s. On occasion you have someone join the team who thinks they have the answers to everything. You need to be careful with this because you do not want to deter them from sharing their thoughts neither do you want them to steal the show. Always allow them the chance to give their input because sometimes their ideas are a welcomed change. Another barrier that you may come across is personality clashes. This can be tricky because you do not want to look as though you are taking sides so give each person a chance to speak and see if you can work out the differences together. You may also encounter those who are reserved and just listen without giving input...
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...Activity-Based Costing (ABC) in Service Industries H & R Block H & R Block A Study of TDABC Costing Robert Kaplan defines activity based costing (ABC) as a system that “provides the conceptual framework for linking financial, production, scheduling, order-entry, marketing, and sales data… into a comprehensive costing and profitability model that reports profitability by individual product, customer, and even by order. (Kaplan, 2009). Time-driven ABC has taken this methodology a step further and simplified the process to make an even more powerful tool to measure the financial effectiveness of a company. This paper is attempts to take a U.S. service company and map out an implementation of TDABC to prove the ease and effectiveness of this accounting tool. Company Description H&R Block is one of the oldest and largest tax service providers. It was founded in 1955 by brothers Henry and Richard Bloch. The company began franchising in 1956 and went public in 1962. It employs over 100,000 trained tax professional both within the U.S. and worldwide. According to their web-site, H&R Block prepares one in every 7 U.S. tax returns.(HRBlock.com, 2013) One key to their success is that they claim to have a retail office within 5 miles of most Americans. H & R Block offers their services both in person and on-line. The tax-payer can chose to walk into an office and work face-to-face with the tax specialist, they can work totally on their own using the online or packaged...
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