Choi Fung Hong Company Limited with Activity Based Techniques
1. Background of chosen Hong Kong Company
Choi Fung Hong Company Limited (Choi Fung Hong) incorporated as private limited company since 1995. The main business Choi Fung Hong is wholesale or retail of their skincare products. At 1995, the company has invested on manufacturing factory and start the business from the telephone order only. As a well-known skincare brand in Hong Kong, Choi Fung Hong was successes to expand their business and there are twelve stores in Hong Kong and Macau within ten years. According the internet was well developed, Choi Fung Hong also perfectly to using online shopping concept. The product types were sold on Choi Fung Hong are variety such as the…show more content… Third, the non-profit making departments which were related to the products are too much. The non-profit making activity include the transportation of raw material, or the finishing of the finished goods. Thus, there are high levels of non-production costs and production costs were the lower percentage of the total costs in products. For example, Choi Fung Hong focuses on quality of their products. Therefore, they may conduct the comprehensive survey to ensure the quality of the products before it launch to public.
3. ABM example
‘Clearly, as information technology evolves, organizations will increase their effectiveness.’ (Cokins, 2001), it seems that well used of the Activity Based Techniques may increase the competitive advantages.
‘The original forms of activity-based costing required detailed determination of activities and the costing of activities by means of activity cost pools’ (Friedman and Lyne, 1995) There are four easily steps in ABC, and it may get more clear to allocate the overheads cost to each unit of products, or by batches of product. And the information from the ABC results should be useful for decision making. Choi Fung Hong will be taken as an example to analysis how the ABC allocate the ‘real’ cost to each product.
The first step of ABC is indentifying the main activities. The main activity of Choi Fung Hong is produce the high quality skin care products and distributed to the customer.