Activity Based Costing
Activity Based Costing
The main reason for the rise of overheads on value adding functions of an organization is the increase of activities such as planning control and performance monitoring on many business processes such as sales, service, R&D, purchasing, logistics, production planning , quality control, order processing etc.
This shows that the percentage of overheads in total of cost in an organization is increasing gradually. In other words, the proportion of total of direct labor and direct material costs to total cost is decreasing.
As a result of that, it is getting more difficult to relate the overhead to direct labor. The cost analysis data shows too general information which is not appropriate for analysis.
Today’s competitive business environment requires “correct” cost information.
Cost transparency Activity Based Costing (ABC)
Are there functions of with large amount of expense?
For example; Are IT costs a “black box” for you?
Activity Based Costing calculations, as a part of current cost accounting system, helps us to identify business process costs in a way to cover all fields of cost, calculate profitability of products, customer, sales channels, and plan the budget by simulation.
Our solutions provide you the information of business process costs which will be used in business process management and reengineering studies.
The software we provide, allows you to construct the organizational structure and process models easily and also identify business process costs in clear way without much effort.
Furthermore, the results of these calculation creates valuable information for making strategic decisions such as actual product cost and customer profitability by decomposing costs in sales channels or customers.
Long Term Cost Reduction Studies
Does our cost reduction studies only benefit in short term and in low measure?
Our Activity Based Costing/ Management (ABC/M) business process cost analysis solutions supports you on long term cost reduction studies by answering the questions given below:
- How much are your business process costs and what are the effects of these on your product/service costs?
- Which business processes have the highest cost?
- Which products/services should be produced within your organization and which should be outsourced? (Make or Buy decision)
- What should the minimum prices of product/service be in order to profit? (What is the break-even point?)
- What is the amount of resource required for the production of planned product/service?
- How will the redefined performance measures affect the business process costs?
- How is the overhead/ total cost distributed within the business processes of the organization?