...Activity Based Costing (ABC) over other costing systems. Also identify at least one company that uses ABC and describe how it benefits the company. Introduction This paper has been formulated in order to determine the basic nature of Activity Based Costing, its advantages and disadvantages. These points are further elucidated by a case study of a Taiwanese hot spring country inn’s implementation of the ABC system. What is Activity Based Costing The Activity-Based Costing theory started in 1987 by Robert S. Kaplan and W. Bruns as a better alternative to the traditional costing method. It has activities as the fundamental cost objects and assumes that activities cause costs and that cost objects create demands for the activities. A traditional costing system uses a single, volume based cost driver. In most cases the traditional system assigned the overhead cost to products on the basis of their usage of direct labor. For this reason traditional cost systems often yields inaccurate product costs and becomes inadequate in terms of calculating true cost to produce specific products for specific customers. ABC system was developed to overcome the shortcomings of the traditional method by using many cost drivers to allocate a indirect costs instead of just using one cost driver such as machine hours. ABC system uses a different approach and allows improvement on the control of overheads by cost/cause relationships that are activity and cost. This flexible system is able to relate costs...
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...Isa becoming more and more popular [3-7] ABC aims to provide accurate costing information to managers to allocate activity costs to products and services by applying cost drivers [8]. Academics who advocate ABC, such as, Cooper and Kaplan [9], and Swenson [10] argue that it provides more accurate cost data needed to make appropriate strategic decisions about product mix, sourcing, pricing, process improvement, and evaluation of business process performance. These claims have led many firms to adopt ABC systems [8]. The benefits of ABC and its positive impact on firm’s performance motivated a numerous studies which examined various aspects of ABC. Among such studies are McGowan [11] who assessed the integrity of ABC success, Innes and Mitchell [4, 12] and Yanren [13] who conducted research on factors affecting ABC adoption, and Shield [3], Shields and McEwen [14], Gosselin [15] and Baired et al.[16, 17]who concentrated on factors influencing ABC success especially at the implementation stage. However, there is mounting evidence that suggests most of firms are experiencing problems in implementing ABC and, in some extreme cases, ABC implementation is not successful [3], which later resulted in abandoning the ABC systems altogether [15]. Questions arise as to why ABC implementation is successful in certain companies and fails in others. Based on the contingency theory, researchers have argued that the reasons for different degrees of ABC success could be due to the different contextual...
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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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...answers to the three requirements. 1. Using the original costing system with the single indirect cost allocation base (direct labor hours), compute the total budgeted cost per package for the headless shrimp and then for the peeled and deveined shrimp. Round to two decimal places. (Hint: First, compute the predetermined overhead allocation rate. Then compute the total budgeted cost per package for each product.) 2. Use activity-based costing to re-compute the total budgeted cost per package for the headless shrimp and then for the peeled and deveined shrimp. Round to two decimal places. (Hint: First, calculate the predetermined overhead allocation rate for each activity. Then calculate the total indirect costs of (a) the entire headless shrimp product line and (b) the entire peeled and deveined shrimp product line. Next, compute the indirect cost per package of each product. Finally, calculate the total cost per package of each product.) 3. Write a memo to Bronson CEO Gary Pololu explaining the results of the ABC study. Compare the costs reported by the ABC system with the costs reported by the original system. Point out whether the ABC system shifted costs toward headless shrimp or toward peeled and deveined shrimp, and explain why. Finally, explain whether Pololu should feel more comfortable making decisions using cost data from the original system or from the new ABC system. 4. In 75 words or fewer, explain the difference between allocating...
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...179 International Journal of Collaborative Research on Internal Medicine & Public Health Specifics of the Activity-Based Applications in Hospital Management Boris Popesko * Tomas Bata University in Zlin, Czech Republic * Corresponding Author; Email: popesko@fame.utb.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...
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...2. Three voice telecommunication costing system: 3 2.1 Overview about three system: 3 2.2 The differences between 2 common system 1995-1998 and 1999: 4 3. Overcharging of the 1995-1998 system: 5 4. Assessment of overconsumption in 1995-1998 period: 6 5. Cost savings through reduced consumption in the 1999 system: 7 6. Conclusion: 8 7. Recommendation: 8 Appendix 1: Calculation cost of a large and a small customer in 1995-1998 system and 1999 system 9 Appendix 2: Calculation cost of actual usage in 1998 and proposed usage in 1999 under 2 systems in Huntsville Division 10 Appendix 3: Cost savings company get and lost 11 Ciatation: 12 1. Introduction: For several past years, there had been some issues about the costing system for allocating voice telecommunication services in the Boeing Company that interested many managers in company. One important issue that whether activity-based system was more useful than simple system or not. Although it still has some arguments about usefulness of simple costing system and activity-based costing system on allocating cost, there is no doubt that each system had its own benefits and helped managers managing overhead and understanding profitability of products and customers, is a powerful tool for decision making. The main purpose of this assignment is providing a general evaluation on Boeing’s voice telecommunication services through activity-based and simple systems. Our assignment will cover all of advantages...
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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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... | |Course Code |EBF 2043 | |Credit hours |3 | |Prerequisite |Accounting | |Synopsis |The course introduces the vital role played by management accounting and the information provided by management accounting information | | |systems (MAIS) in a firm or an organisation. Management accounting is used for decision making, learning, planning and controlling | | |activities that are supporting operational and strategic needs. It also 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...
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...ABC Online Campus Management System (ABC-CMS) 1. Introduction ABC campus management system is an online system which will be used to manage and facilitate the educational activities of ABC University. The system will help the university to maintain student’s details as well as staff. In addition to this, the system will work as a platform communication where lectures, non-academic staff and students can communicate. Resource, announcements and other important materials will be uploaded on the system. On the other hand, student will use the system to register online and check their grades without going to the registry office. By using this online computerized system, the university will be able to save a lot of time and money since tedious and manual work is eliminated. 1.1. Problem Statement It is very time consuming and expensive to handle large number of students and doing things manually will exponentially increase time and money spent on it. More staff will be needed and the workflow will be very slow thus making it very inefficient and tedious. The ABC University has realized the benefits of computerized system to manage such a large number of students and staff. It is expected that this new system will cater all the needs of the university and enable it to save more money and time. In addition to the previous two advantages, the main goal of the system is to make the university day to day operations and functions faster, more efficient and reliable. 1.2. Purpose (Objectives)...
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...CHAPTER 4 ° SOCIAL AND CULTURAL ENVIRONMENTS 114B CASE 4-2 Disney Learns to "Act Local" on the Global Stage The Walt Disney Company, home to Mickey Mouse, Donald Duck, and other iconic characters, has a stellar reputation in many parts of the world for its family-friendly entertainment offerings. The company's parks and resorts division operates theme parks in five global locations, including a recent $1.8 billion park in Hong Kong. Disney's fabled studio entertainment unit has an illustrious history in both animation and live-action features. The Lion King, released in 1994, is the highest grossing animated film of all time. More recently, Disney has enjoyed massive hits with live-action features. These include Pirates of the Caribbean and its sequels as well as classic American fare such as the TV show High School Musical. However, despite high worldwide awareness levels of the Disney brand, as of 2006 only 25 percent of the company's revenues came from outside the United States. Historically, the Disney team has created products at its headquarters in Burbank, California, and then exported them to the rest of the world. Now, as the company targets China, India, South Korea, and other emerging markets, it is departing from its "one size fits all" approach. One factor driving the strategy change: the first-year visitor count in Hong Kong fell short of the target figure of 5.6 million people. This prompted company executives to step up efforts to educate the Chinese about...
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...Walt Disney Case Analysis Corporate Strategy The Disney brand is extremely well known, but most may not realize how diversified the company actually is. The company is made up of media networks, theme parks and resorts, studio entertainment, consumer products, and interactive media. Walt Disney Company’s corporate strategy involves three aspects; creating high-quality family content, exploiting technological innovations to make entertainment experiences more memorable, and internal expansion. Disney wants the whole family to be involved. Much of their success is due to targeting not just children, but the entire family. The movies and shows they release are done with family in mind. Theme parks and resorts, Disney Cruises, live performances and interactive media are all aimed at creating high quality family content. Disney acquired Pixar, Marvel, and Playdom in order to satisfy their second corporate strategy. The acquisition of Marvel and Pixar was intended to enhance Disney’s animation abilities to make experiences more memorable. Playdom gave the company new online gaming capacities that Disney hoped would help to improve its struggling interactive media division. UTV was acquired to facilitate its international expansion efforts. Disney’s international expansion strategy mainly focused on opportunities in emerging overseas markets. As of 2012 The Disney Channel was available in more than 100 countries and reached 75 percent of viewers in China and Russia. This was...
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...Assignment 2 ABC University Clinical Allocation System After the Business Case review, the executive management has decided to fund the new Clinical allocation system project. Head of Dean, Jane Pears has requested this project to high Impact Software (HIS) to assist in establishing a new computerized system which will allow user to add or edit student’s details using a graphical interface and store them on a database. In addition, a search function will also be implemented. As Group You are required to write a Project Management Plan (PMP) to recommend suitable solution for the identified problem. Following contents must be covered in the project Management Plan. * Executive Summary * Background * Objective * Scope * Product and Deliverables * Issues * Risks * Team Structure * Constraints and Dependencies. * Assumptions 1. Executive Summary Due to dean regarding has been agreed from Executive Board of the university. The executive management has decided to fund the new Clinical allocation system project. 2. Background ABC University Clinical Allocation System Project ABC University is a larger university that has a good reputation among the students and community regarding its quality education and services. Jane Pears is a dean of nursing department has found the current clinical allocation system is not running efficient as it should be. The system often make errors and consumes more time to retrieve data from...
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...Broadcasting Corporation (ABC) is one of the nations leading global media corporations throughout Australia, Asia, and the Pacific. The ABC strives “to be a trusted and innovative media organization, enriching the lives of all Australians and presenting Australian perspectives to the world” (Our Strategic Plan). Focusing on four specific values in which its foundation and principles of the manner in which their work should be executed; Integrity, “we act with trustworthiness, honesty, and fairness” (Our Strategic Plan). Respect, “we treat our audiences and each other with consideration and dignity” (Our Strategic Plan). Collegiality, “we work together willingly” (Our Strategic Plan). Innovation, “we foster creativity and distinctiveness. We encourage new thinking and strive to achieve quality in all that we do” (Our Strategic Plan). In this analysis I will be discussing the different aspects in which the ABC operates and how they contribute to a growing globalizing society. The Commonwealth of Australia is the owner of the Australian Broadcasting Corporation. The federal government funds this organization through triennial funding arrangements, meaning that the ABC receives money every three years from the government. Data in relation to ABC funding is easily accessible on the Parliament of Australia government website in which the Annual Reports of the ABC and the Commonwealth Budget Papers are published. The ideological orientation of the ABC is a constitutional monarchy...
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...behind ABC’s decision to close ABC shops (Battersby 2015) on the basis of strategic evaluation of both external and internal environment by applying analytical tools. The possible outcomes of this action will be critically assessed. Analysis 1. External As reported by Owens (2015), the main consideration of management is the disappointing profitability of ABC shop. Macro environment is evaluated by applying PEST and Porter’s Five Forces framework introduced by Jones (2015). PEST Political: Compared with industry-level, ABC group is facing more significant political impact at company specific level. On the one hand, the state-owned ABC benefits from large government funding as it enables ABC to carry out robust long-term strategy with clear income forecast. As discussed by McNair and Swift (2014), ABC has been acknowledged as producing good-quality news to serve public interest. On the other hand, being public means ABC suffers more political tension than private media. Especially when the Australia government announced to cut ABC funding by $ 254 million despite promising not to before the election (Hutchinson 2015), currently ABC is confronted with big challenge of delivering consistent service with less budget, keeping good relationship with successive government while remaining political-neutral in broadcasting, reminding people of its achievements and promoting public image to weather the storm. Overall, cutting funding gives ABC a hard time and enforces the company...
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...MIS-502, Fall-2015. NBA: Competing on Global Delivery with Akamai OS Streaming 1. Why is it important that all fans in the world have the same experience? A. It is very important that all fans in the world have the same experience to avoid the feeling of exclusion from the non- American fans. Akamai Company should maintain its website in an efficient manner which includes less streaming in video, RSS feeds etc. The NBA has real assets to expend itself around the world because, it contains numerous other countries players. Fans would be able to view whatever they want by using Akamai website with NBA. 2. Why is it important that individual franchise owners can build, manage, and distribute on the NBA platform their own content? A. Each team has its own franchise. Each team has to build its own image to become more powerful in franchise market. It is important that franchise owners are able to distribute the content, and publish the live events. Individual franchise owners will also able to gain exposure for their franchise with fans as well as business partners. The franchise owner is able to have access to a segment of the population that the NBA can’t reach. 3. Using the competitive forces model illustrated in Figure 2.3 of the text, analyze the NBA’s market situation. How does the use of Akamai help the NBA compete in this market? A. According to figure 2.3, there are five competitive forces which explained the E-commerce sway industry structure...
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