Managerial accounting an introduction to concepts methods and uses
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Managerial Accounting: An Introduction To Concepts, Methods, And Uses. Chapter 3 Activity-Based Management. Maher, Stickney and Weil. Learning Objectives (Slide 1 of 2). Identify strategic and operational uses of activity-based management.

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Managerial Accounting: An Introduction To Concepts, Methods, And Uses

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Managerial accounting an introduction to concepts methods and uses

Managerial Accounting: An Introduction To Concepts, Methods, And Uses

Chapter 3

Activity-Based Management

Maher, Stickney and Weil


Learning objectives slide 1 of 2

Learning Objectives(Slide 1 of 2)

  • Identify strategic and operational uses of activity-based management.

  • Differentiate between traditional cost allocation methods and activity-based costing.

  • Understand the concept of activity-based costing.

  • Identify the steps in activity-based costing.


Learning objectives slide 2 of 2

Learning Objectives(Slide 2 of 2)

  • Apply activity-based management and costing to marketing.

  • Use the cost hierarchy to organize cost information for decision-making.

  • Distinguish between resources used and resources supplied, and measure unused resource capacity.

  • Explain the difficulties of implementing advanced cost-management systems.


Activity based costing management abcm slide 1 of 4

Activity-based Costing & Management (ABCM) (Slide 1 of 4)

  • ABCM rests on this premise:

    • Products require activities

    • Activities consume resources

  • To understand a product’s costs, one must?

    • Identify activities required to make the product


Activity based costing management abcm slide 2 of 4

Activity-based Costing & Management (ABCM) (Slide 2 of 4)

  • Identify resources used to provide for those activities

  • Figure the cost of those resources

  • To be competitive, managers must know both:

    • Activities involved in making the goods or providing the services, and

    • The cost of those activities


  • Activity based costing management abcm slide 3 of 4

    Activity-based Costing & Management (ABCM) (Slide 3 of 4)

    • ABCM has 2 parts: What are they?


    Activity based costing management abcm

    Activity-based Costing & Management (ABCM)

    • ABC treats mostly indirect costs including:

      • Overhead costs related to the manufacture of a product or providing a service

      • Indirect costs of marketing a product

      • Indirect costs of managing a company


    Discuss strategic uses of abcm

    Discuss Strategic Uses of ABCM


    What are the 4 steps of activity analysis

    What are the 4 steps of activity analysis?


    Define cost pools

    Define Cost Pools


    Review the value chain

    Review the Value Chain


    Discuss the analysis of activities cycle

    Discuss the Analysis of Activities Cycle


    Discuss traditional allocation methods

    Discuss Traditional Allocation Methods


    Discuss activity based costing

    Discuss Activity-Based Costing


    What are the required steps of activity based costing

    What are the required steps of activity-based costing?


    Cost rates per cost driver unit

    Cost Rates per Cost Driver Unit

    • Calculate predetermined cost rate for each cost driver as follows:


    Cost hierarchies

    Activity Category

    Capacity

    Customer

    Product

    Batch

    Unit

    Examples

    Plant Mgmt & Depr

    Mkt Research

    Product Specs & Testing

    Machine Setups

    Direct Materials

    Cost Hierarchies


    Resources used vs resources supplied

    Resources Used Vs. Resources Supplied

    • ABC estimates cost of resources used by an activity as:

      Cost driver rate X cost driver volume

    • Cost of Resources supplied = amount spent on the activity

    • Difference between resources used and supplied is unused capacity


    Managerial accounting an introduction to concepts methods and uses

    • If you have any comments or suggestions concerning this PowerPoint Presentation for Managerial Accounting, An Introduction To Concepts, Methods, And Uses, please contact:

    • Dr. Michael Blue, CFE, CPA, CMA

    • [email protected]

      Bloomsburg University of Pennsylvania


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