activity based costing and customer profitable analysis

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1、ConfirmingPagesCHAPTERFIVEActivity-BasedCostingandCustomerProfitabilityAnalysisAfterstudyingthischapter,youshouldbeableto...1.Explainthestrategicroleofactivity-basedcosting2.Describeactivity-basedcosting(ABC),thestepsindevelopinganABCsystem,andthebenefitsofanABCsystem3.Determineproductcosts

2、underboththevolume-basedmethodandtheactivity-basedmethodandcontrastthetwo4.Explainactivity-basedmanagement(ABM)5.DescribehowABC/Misusedinmanufacturingcompanies,servicecompanies,andgovernmentalorganizations6.Useanactivity-basedapproachtoanalyzecustomerprofitability7.Identifykeyfactorsforsucc

3、essfulABC/MimplementationBewareoflittleexpenses.Asmallleakwillsinkagreatship.BenjaminFranklinThischapterhasalottodowithimplementingthespiritofBenjaminFranklin’sobservation—incostmanagementterms—thatitreallydoesmatterhowaccuratelyyoucalculateacost.Why?Havingaccuratecostsisimportantforavariet

4、yofreasons:acompanymightfindthatithasadifficulttimedeterminingwhichofitsproductsismostprofitable.Alternatively,itfindsitssalesincreasingbutprofitsdecliningandcannotunderstandwhy.Perhapsthecompanykeepslosingcompetitivebidsforproductsandservicesanddoesnotunderstandwhy.Inmanycases,accuratecost

5、informationistheanswertothesequestions.Accuratecostinformationprovidesacompetitiveadvantage.Ithelpsacompanyororganizationtodevelopandtoexecuteitsstrategybyprovidingaccurateinformationaboutthecostofitsproductsandservices,thecostofservingitscustomers,thecostofdealingwithitssuppliers,andthecos

6、tofsupportingbusi-nessprocesseswithinthecompany.TheStrategicRoleofActivity-BasedCostingLEARNINGOBJECTIVE1Activity-basedcosting(ABC)isamethodfordeterminingaccuratecosts.WhileABCisExplainthestrategicroleofarelativelyrecentinnovationincostaccounting,itisrapidlybeingadoptedbycompaniesactivity-b

7、asedcosting.acrossmanyindustriesandwithingovernmentandnot-for-profitorganizations.Hereisaquickexampleofhowitworks,andwhyitisimportant.Supposeyouandtwofriends(JoeandAl)havegoneoutfordinnertohavepizza.Youeachorderanindividualsizepizza,andAlsuggeststhatyoua