ABC-ABM at Hewlett-Packard Europe for customer support. Isabelle Lacombe & Pierre-Laurent Bescos

1053 Words Feb 1st, 2010 5 Pages
TABLE OF CONTENTSQuestion 1a ……………………………………………………………………………………………………………………….3b ……………………………………………………………………………………………………………………….3c ……………………………………………………………………………………………………………………....4Question 2 …………………………………………………………………………………………………………………………………5Question 3 …………………………………………………………………………………………………………………………………6Question 4 …………………………………………………………………………………………………………………………………6References …………………………………………………………………………………………………………………………………7QUESTION 1a.Calculate the cost of the activities for France.

Table 1.4 Calculation of the ABC results for Q3 1998; cost per activity in € thousandsActivity FranceGermanyItalyUKTotalCall receipt1.4502.2509001.5006.100Call qualification1.6503.0008002.0007.450Dispatching (people and parts)1.2501.0009509754.175Logistics (parts
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Another point of concern was the competition in the market that drove profit margins down. The main objectives for the ABC project at WCSO were 'to measure the efficiency of the activities, to find the link between departments and activities and to measure profit per repair (at client, contract or product level)' (Lacombe & Bescos, 1998).

These reasons are in line with the general reasons to use ABC as stated by van der Meulen & Koomen (2010) and Horngren, Datar, Forster, Rajan & Ittner (2009). ABC is used as a solution for the increase in product diversity, to allocate the indirect cost and to find ways to anticipate on the market.

QUESTION 3Explain the interests and disadvantages of the non-integration of ABC in the Cost Accounting Information System.

HP in 1994 decided not to integrate the ABC in the Cost Accounting Information System (abbreviated CAIS) for a number of reasons. The first reason is that at that time the CAIS was implemented in all HP business units worldwide. This system was considered very complex and difficult to change. Because ABC was only used in one business unit it was thought to be insensible to change the whole system. The second reason is connected to the codification of the operations in the CAIS. If the ABC would be integrated this system would have to be reorganized and all the employees would have to learn to operate the new
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