Costing, including Activity Based Costing
Questions to Ask
Description of Service
Activity Based Costing (ABC) systems collect financial and operating performance information about activities in which an organization is engaged during its production of goods or performance of services.
A manufacturer of textile machinery parts desired an improved costing system based on ABC concepts. Results -- Development of a costing system that enabled the organization's management to change the manufacturing flow for improved design for manufacturability.
A manufacturer of metal parts desired an ABC system to provide better information for pricing and profit improvement. Results -- The new costing system provided information about several product lines and manufacturing processes that enabled management to reprice recouping the consulting fees immediately and, thereafter, improving profitability in the longer-term.
A major municipality wanted to understand better the costs associated with providing service to constituents and undertook departmental costing projects. Results -- An improved understanding of costs and a methodology to outsource services and measure effects of private sector proposals.
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