...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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...ACC560 Assignment 1 Activity-based Costing in Service Industries To Purchase Click Link Below: http://strtutorials.com/ACC560-Assignment-1-Activity-based-Costing-in-Service-Industries-004.htm Assignment 1: Activity-based Costing (ABC) in Service Industries Due Week 3 and worth 300 points Research a U.S. company in the service industry with e-commerce activities. Write a five to six (5-6) page paper in which you: 1. Describe the company you researched in one to two (1-2) paragraphs. 2. Discuss how a time driven ABC cost system can be implemented in the company you researched and the benefits that the use will yield to the business performance. 3. Assess how using an ABC system can provide a competitive advantage to the company in the market space it operates and the resulting impact to the business performance. 4. Examine the potential impact of time-driven ABC costing on services provided online with those provided through traditional channels, considering how this knowledge will impact decisions made by management about these services. 5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources. Your assignment must follow these formatting requirements: • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. ...
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...ACC560 Assignment 1 Activity-based Costing in Service Industries To Purchase Click Link Below: http://strtutorials.com/ACC560-Assignment-1-Activity-based-Costing-in-Service-Industries-004.htm Assignment 1: Activity-based Costing (ABC) in Service Industries Due Week 3 and worth 300 points Research a U.S. company in the service industry with e-commerce activities. Write a five to six (5-6) page paper in which you: 1. Describe the company you researched in one to two (1-2) paragraphs. 2. Discuss how a time driven ABC cost system can be implemented in the company you researched and the benefits that the use will yield to the business performance. 3. Assess how using an ABC system can provide a competitive advantage to the company in the market space it operates and the resulting impact to the business performance. 4. Examine the potential impact of time-driven ABC costing on services provided online with those provided through traditional channels, considering how this knowledge will impact decisions made by management about these services. 5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources. Your assignment must follow these formatting requirements: • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. ...
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...Research on U.S. Company in the service industry using ABC cost ACC525 - Managerial Accounting Iglobal University Submitted by: Urveshkumar Soni Submitted to: Prof. Mahmoud Elharazi, CPA ------------------------------------------------- Date: 08/01/2015 Activity-based costing (ABC) is a method for more precisely allocating overhead to those items that essentially use it. The structure can be used for the targeted reduction of overhead costs. ABC works best in difficult environments, where there are many machines and products, and twisted processes that are not easy to sort out. Equally, it is of less use in a efficient environment where production processes are abbreviated. (Activity Based Costing - AccountingTools. (n.d.)) Cost accounting defines several different systems of approaching the cost of producing certain products in the manufacturing industry, or finishing certain jobs in the service industry. Activity-based costing (ABC) is the most widely accepted and renowned method of cost accounting. ABC is based on the accounting theory that every output needs certain activities, and every activity requires certain resources. ABC is a two-step process that first allocates costs of resources to activities and then allocates activity costs to outputs. For example, a waiter makes a specific hourly pay and work for 10 tables in a single night. Under an ABC system every table will be assigned a cost subject on what fraction of an hour was required to...
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...overhead for job order costing. 2. In recent industrial history advances in computerized systems, technology innovation, global competition, and automation has changed manufacturing environments. That is what reduced the usefulness of direct labor as the primary basis for allocating overhead to products. 3. Machine hours are frequently more relevant than direct labor hours. 4. Overhead allocation to high volume products is responsible for less overhead cost per period, where overhead allocation to low volume products under a traditional costing system is responsible for more overhead cost per unit than the high-volume. 5. Activity based costing (ABC) is an overhead cost allocation system that allocates overhead to multiple activity pools and assigns the activity cost pool to products or services. Traditional product costing is determined through overhead cost. 6. Activity-Based Overhead Rates = Overhead/ Direct Labor Hours 7. The steps involved in developing an activity based costing system are identify and classify the activities, identify the cost driver, compute the activity based overhead rate, and assign overhead costs to production. 8. A value-added/non-value added flowchart is based on an analysis of all the activities preformed to manufacture a product. The flow chart will record each activity done and the time correlating to the activity. 9. Activity cost pool is the overhead cost attributed to a distinct type of activity like ordering materials...
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...The implementation of Activity Based Costing (ABC) in Chinese refining manufacturers Table of contents 1. Introduction 2 1.1 Research background 2 1.2 domestic and foreign research status 4 1.2.1 Activity-based costing development process 4 1.2.2 Status quo of Activity-Based Costing Development and Application in China 6 1.3 research contents 8 2. Related theories 9 2.1concept of ABC 9 2.2 rationales 10 2.3 difference between ABC and traditional costing 12 2.3.1. Different calculating targets 12 2.3.2 Different calculation 12 2.3.3. Different Finished goods costs term 13 3. Research methodology 13 3.1 case study 13 3.2 The survey method 13 3.3 Literature 14 4. Research Results 14 4.1 problems of traditional costing method in oil refining enterprise 14 4.2suggestions for Chinese enterprises’ application ABC 15 Bibliography 15 1. Introduction 1.1 Research background With the rapid development of the national economy, enterprises’ competition is increasingly fierce; many companies are using advanced science and technology to achieve competitive advantage in the market. Market competition and technological progress are the two fundamental economic factors which generate activity-based costing. Since The beginning of 1980s of the 20th century, the activity based cost method is paid a wide range of attention; the developed countries gradually adopt it in a number of advanced enterprises...
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...Activity Based Costing Presentation by: Viraj Vaidya (12F353) & Nikhil Vanage (12F360) SCM Introduction Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing. CIMA (Chartered Institute of Management Accountants) defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. Aims of model With ABC, a company can soundly estimate the cost elements of entire products ACTIVITIES and services. That may help inform a company's decision to either: * Identify and eliminate those products and services that are unprofitable and lower the prices of those that are overpriced (product and service portfolio aim) * Or identify and eliminate production or service processes that are ineffective and allocate processing concepts that lead to the very same product at a better yield (process re-engineering aim). In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services...
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...C H A P T E R F I V E INTRODUCTION TO COST MANAGEMENT Activity-Based Costing and Management After studying this chapter, you should be able to . . . 1. Explain the strategic role of activity-based costing 2. Describe activity-based costing (ABC), the steps in developing an ABC system, and the benefits and limitations of an ABC system 3. Determine product costs under both the volume-based method and the activity-based method and contrast the two 4. Explain activity-based management (ABM) 5. Describe how ABC/M is used in manufacturing companies, service companies, and governmental organizations 6. Use an activity-based approach to analyze customer profitability 7. Identify key factors for successful ABC/M implementation PART I Beware of little expenses. A small leak will sink a great ship. Benjamin Franklin This chapter has a lot to do with implementing the spirit of Benjamin Franklin’s observation—in cost management terms—that it really does matter how accurately you calculate a cost. Why? Having accurate costs is important for a variety of reasons: a company might find that it has a difficult time determining which of its products is most profitable. Alternatively, it finds its sales increasing but profits declining and cannot understand why. Perhaps the company keeps losing competitive bids for products and services and does not understand why. In many cases, accurate cost information is the answer to these questions. Accurate cost information provides a competitive...
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...INTRODUCTION TO COST MANAGEMENT Activity-Based Costing and Management After studying this chapter, you should be able to . . . 1. Explain the strategic role of activity-based costing 2. Describe activity-based costing (ABC), the steps in developing an ABC system, and the benefits and limitations of an ABC system 3. Determine product costs under both the volume-based method and the activity-based method and contrast the two 4. Explain activity-based management (ABM) PART I 5. Describe how ABC/M is used in manufacturing companies, service companies, and governmental organizations 6. Use an activity-based approach to analyze customer profitability 7. Identify key factors for successful ABC/M implementation Beware of little expenses. A small leak will sink a great ship. Benjamin Franklin This chapter has a lot to do with implementing the spirit of Benjamin Franklin’s observation—in cost management terms—that it really does matter how accurately you calculate a cost. Why? Having accurate costs is important for a variety of reasons: a company might find that it has a difficult time determining which of its products is most profitable. Alternatively, it finds its sales increasing but profits declining and cannot understand why. Perhaps the company keeps losing competitive bids for products and services and does not understand why. In many cases, accurate cost information is the answer to these questions. Accurate cost information provides a competitive advantage...
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...analysis into the indirect cost.[3] In addition, activities include actions that are performed both by people and machine. However, as the percentages of indirect or overhead costs rose, this technique became increasingly inaccurate, because indirect costs were not caused equally by all products. For example, one product might take more time in one expensive machine than another product—but since the amount of direct labor and materials might be the same, additional cost for use of the machine is not being recognized when the same broad 'on-cost' percentage is added to all products. Consequently, when multiple products share common costs, there is a danger of one product subsidizing another. ABC is based on George Staubus' Activity Costing and Input-Output Accounting.[4] The concepts of ABC were developed in the manufacturing sector of the United States during the 1970s and 1980s. During this time, the Consortium for Advanced Management-International, now known simply as CAM-I, provided a formative role for studying and formalizing the principles that have become more formally known as Activity-Based Costing.[5] Robin Cooper and Robert S. Kaplan, proponents of the Balanced Scorecard, brought notice to these concepts in a number of articles published in Harvard Business Review beginning in 1988. Cooper and Kaplan described ABC as an approach to solve the problems of traditional cost management systems. These traditional costing systems are often unable to determine accurately...
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...Summary Introduction of Beer Business Costing Technique Chosen PROCESS COSTING 1 2 2 2 Assumptions Processes of Manufacturing Beer DEPARTMENT ONE: STAGE 1 - MIXING DEPARTMENT ONE: STAGE 2 - BREWING DEPARTMENT TWO: PACKAGING 3 4 4 4 5 Process Costing DETERMINING FIGURES CALCULATING COST PER EU 6 7 8 Cost Reconciliation Recommendations CAPPING & LABELLING BOTTLES & UTILITIES TRANSPORTATION 9 10 10 11 11 Introduction of Outpatient Business Costing Technique Chosen ACTIVITY BASED COSTING (ABC) JUSTIFICATION 12 12 12 12 Assumptions List of Activities and Cost Drivers Traditional Costing COMPARE AND CONTRAST WITH ABC UNDER ABC METHOD UNDER TRADITIONAL COSTING METHOD 13 13 14 14 16 16 Recommendations Conclusion Learning Points Reflections Bibliography Appendix 1 (Heineken) Appendix 2 (SATA CommHealth) 18 20 21 23 24 25 27 ACCT102 Management Accounting ! G8, Group 5 EXECUTIVE SUMMARY ! Our project aims to apply costs concepts in the beer manufacturing and hospital service industry. The companies we will be using for our case studies will be Heineken and SATA CommHealth. We will seek to identify the most suitable cost concept for each industry to allow for better internal decision making purposes. Various costing methods, namely, Activity-Based Costing and Process Costing, will be used to analyse the business models of these companies in the aforementioned industries. Following from our analysis and diagnosis...
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...use of activity based costing (ABC) in Mauritian firms. INTRODUCTION: Traditional costing systems have worked well for many decades and may continue to be useful today to value inventory and measure the cost of goods sold. However, practitioners are facing various challenges using the traditional costing systems in today’s competitive environment. Cost and Management Accountants in a globalize world are now expected to be team players in such areas as product development, profitability analyses, quality process and improvements, and the evaluation of overall company performance (Welfle and Keltyka, 2000). As a strategic cost management tool, activity-based costing (ABC) plays a vital role. The ABC (activity-based costing) model has revolutionized costing systems (Johnson and Kaplan, 1987). The activity-based costing (ABC) is a method of analyzing business operations that leads to cost identification (e.g. direct cost and indirect cost) and cost classifications based on activities (Johnson and Kaplan, 1987). Implementation of ABC reduces costs and improves the resource allocation. It may result in improving resource allocation consistent with strategic objectives and budget surplus (Zaman, 2007). ABC has reportedly helped many organizations to better manage their business activities when combined with total quality management and business process re-engineering (Adams,1996) BACKGROUND The specific objective of my research is to determine how Activity Based Costing is used...
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...Allied Office Products Report to Management Brian Juin Phon Chan Karine Arcand Daniyal Tanveer 5980487 5236461 6024848 Christina Yee Andrea Alamo 5991901 6041222 ADM4345A November 13, 2013 Page 1 of 13 Table of Contents Introduction ......................................................................................................................................................... 3 Corporate/Divisional Strategy ........................................................................................................................ 3 TFC Business Strategy.................................................................................................................................... 3 Brief SWOT Analysis ..................................................................................................................................... 4 Value-chain Analysis ...................................................................................................................................... 4 Key Success Factor ............................................................................................................................................. 4 Management Control Systems ............................................................................................................................ 5 Recommendations .....................................................................................................................................
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...ACTIVITY –BASED COSTING (ABC) IN SERVICE INDUSTRIES Name: Ira Suri Date: April 23, 2016 Class Name: ACC 560: Managerial Accounting Professor Name: Professor Jones Olajide Abstract This paper explores Activity- based costing in Amazon Company, which is predominantly considered to be a forerunner in online retailing. It offers comprehensive range of products like books, CDs, videos, DVDs, electronics, toys, tools, home furnishings and housewares, apparel, and kitchen gadgets. It has evolved over the years and through this paper we shall evaluate how a time driven ABC cost system can be implemented in Amazon and how will it provide a competitive edge to the company in the market space it maneuvers in and subsequent impact of the business performance. Also, the paper will assess the latent impact of time- driven ABC costing on services provided online with those delivered through traditional channels. Amazon.com Amazon is one of the biggest online retailing companies, which deals in an innumerable collection of products like books, Cd.s, Dvd’s, shoes, clothing, home furnishings, hardware, music and what not. Amazon’s vision is to be globe's supreme consumer centric business; to construct an abode where individuals can uncover and discern everything they might desire to acquire online.” Amazon.com also retails goods from renowned dealers involving Virgin Wines, Hotwire, Toysrus.com Inc., Target, The Borders group, Circuit City Stores Inc., Waterstones, Expedia...
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...Activity Based Costing By: Azalea McSwain ACC310: Cost Accounting 1 Instructor: Susan Paris Date: April 18, 2011 Outline I: Introduction a. What is Activity Based Costing b. How Does it Work II. Body a. What does ABC do for Firms b. How to develop the ABC system in a firm c. What are the Steps d. Examples III. Conclusion IV. References Abstract Activity Based Costing was developed in the manufacturing sector of the United States during the 1970’s and 1980’s. This system is used as a method for developing cost estimates in which projects were discrete or subdivided activities. ABC systems calculates the costs of individual activities and assigns costs to their related cost object such as products and services on the basis of the activities performed to produce each product. The Chartered Institute of Management Accountants (CIMA) technology defines ABC as “an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. (Edwards, 2006)” This paper will address what the ABC system does for firms which use it, how to develop such a system in a firm, the steps of the ABC system and some common examples. Activity Based Costing Introduction Activity Based Costing (ABC) addresses internal operating concerns of a firm and is an augmentation to the traditional ledger based cost management system. It doesn’t replace traditional accounting, but it makes use of the source documents provided from...
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