Lecture 4: ACTIVITY BASED COST SYSTEM

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Lecture 4:Lecture 4:ACTIVITY BASED COST ACTIVITY BASED COST

SYSTEMSYSTEM

IFAP – UAJY

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ABC System

A cost information system based on activities with the main purposes is motivating people doing long run cost reduction through managing

the activities well.

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Philosophy ABC System

• Cost is caused• The causes of

cost can be managed

An activity

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Examples of Activities1. Processing purchase orders.2. Handling materials and parts.3. Inspecting incoming material and parts.4. Setting up equipment.5. Producing goods using manufacturing

equipment.6. Supervising assembly workers.7. Inspecting finished goods.8. Packing customer orders.

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Two Stages of ABC

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First Stage

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Frame work

ABPC

SUMBER DAYA AKTIVITAS

Employee Resource

Expense Resource

INFORMASI

Result-Producing Activities

Result-Contributing Activities

Support Activities

Hygiene & Housekeeping

Activities

Informasi Activity Cost

Informasi Operasi

Customer aktivitas

Value- & non-value added activities

Resource driver

Perilaku biaya

Direct Tracing

Alokasi

Driver Tracing

CE

Resource to Activity

ACTIVITY-BASED PROCESS COSTING

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The strengths of ABC

• Informing The ability of ABC system to provide information in monitoring individual performance

• Empowering The ability of ABC system to provide information for empowering employee in doing cost reduction.

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Second Stage

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Benefits of ABPC Information

• Performance evaluation each activity

• Determine target cost reduction continues improvement

• Budgeted cost calculation

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EMPOWERING INFORMATION

• Value- and non-value-added activities• Activity’s customer• Cycle Effectiveness• Activity type

Result producing, result contributing, supporting, hygiene and housekeeping

• Method of resource assignment to activity Direct, driver tracing and allocation

• Resource driver• Budget type

Fixed, Variable, Step variable

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RESULT-PRODUCING ACTIVITIES

• Directly related with generating revenue from customer by selling product/services.

• Example: production activity, marketing, selling, and distribution

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RESULT-CONTRIBUTING ACTIVITIES

• Giving assistance to result-producing activity in generating profit from customer.

• Examples: logistic activity, maintenance activity and after sales services activity.

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SUPPORT ACTIVITIES

• aktivitas yang menyediakan jasa layanan kepada result-producing activity dan result-contributing activity.

• merupakan pusat layanan jasa (service center) terutama untuk melayani jasa yang dibutuhkan oleh result-producing activity dan result-contributing activity.

• aktivitas keuangan, aktivitas akuntansi, aktivitas kesekretariatan, aktivitas hukum, dan aktivitas manajemen sumber daya manusia, aktivitas pengawasan intern, dan aktivitas hubungan masyarakat.

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HYGIENE AND HOUSEKEEPING ACTIVITIES

• aktivitas yang menyediakan jasa layanan kebersihan dan kerumahtanggaan kepada result-producing activity, result-contributing activity, dan support activity.

• aktivitas pembersihan kantor dan lingkungan, aktivitas pemeliharaan taman.

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