Essay On Manufacturing In Manufacturing

The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise.

The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise.

Under an ABC system, the allocation of costs to products is achieved through at least four analytical steps. Firstly, costs are grouped into activity levels. Secondly, cost drivers are

Activity-based costing (ABC) methodology is an instrument designed to provide accountants and managers with valuable costing information that will allow them to make sound strategic decisions. It is used as a secondary methodology rather than a replacement for the company’s primarily costing system. The ABC methodology identifies activities in an organization and for each activity it assigns a cost. The cost reflects the actual resource consumption by each activity that has been identified.

The costing approach should be based on per Transaction Basis rather than on per kit or per pound basis because of the following reasons:

As previously mentioned, the use of activity-based costing gives Kemps an advantage when competing for customers in an ever more competitive and growing market. However, the ability to succinctly distinguish how many small changes, when taken together, can have a large impact on cost savings (and therefore profit), is necessary in order to convince customers who may not be familiar with the many benefits of ABC. Mainly, management would want to demonstrate how the cost savings that they enjoy are ultimately passed on to their customers, perhaps by showing some of the improvements that have been made to their own company as a result of implementation, specifically focusing on advancements that would have a direct impact on the customer’s business.

In using ABC overhead costs are distributed differently across the three products, but in total they are the same, in total. However, ABC changes the information that managers receive to make effective business decisions, which will ultimately result in improved business results.

Q1. Based on the 2004 statement of profit and loss data (Exhibits 1 and 2), do you agree with Water’s decision to keep product 103?

Q3. How were the limitations of the existing cost system overcome by the ABC Cost System? What are the implications of the ABC system?

An organization costing system is a system that helps the management with the strategy planning while the system plays an important role in providing accurate cost information about the products and customers (Curtin, 2006). UPS utilizes the Activity-Based Costing (ABC) system. ABC assumes that activities cause costs and that cost objects create the demand for activities (Marx,

Eliyahu M Goldratt purpose of writing this book is to introduce individuals to how to manage and measure effectively. Goldratt illustrates how the accounting cost figures and productivity per machine can actually be problematic for it misleads individuals into thinking they’re achieving the goal. Rather all attention should be focused on strategy planning and managing the bottlenecks because they are the true driving metric of production. One major takeaway message from this novel is that there is always room for improvement. This philosophy of ongoing improvement originated in a Toyotas production system and is better know as the Kaizen theory. The Novel, stresses the Kaizen theory, which starts with an indication, then an in-depth analysis, followed by a diagnosis, eventually arrive ate a hypothesis and ending with

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

Q3. How were the limitations of the existing cost system overcome by the ABC Cost System? What are the implications of the ABC system?

Question 2. Was the implementation of ABC at GEI successful? What did GEI do well? What areas of the implementation could have been improved on? What are the key success factors that lead to or impede successful ABC implementation? Be sure to consider behavioural as well as technical factors. Analysis 2: It appeared that GEI 's two-phased implementation plan had been partially successful. The first phase succeeded in delivering timely, revised product-cost information for strategic pricing and mix decision making. The second phase struggled to deliver upon its promise of delivering productivity improvement and cost reduction. The ABC implementation was completed in the nine-month time frame, as planned. Based on a total of 88 interview sessions, 674 activities and 254 activity drivers were identified across all five plants and entered into the standard cost subsystem that provided data for the financial reporting system. The project team streamlined the implementation process by only including activities within the cost model that it believed could materially affect strategic product-pricing and mix

It consists of weighting and combining the weights of the ten factors and to evaluate implementing ABC. The potential benefits of ABC can be analyzed in advance along two separate dimensions. And there are ten mediating factors (Pricing Diversity, Support Diversity, Common Processes, Cost Allocation, Growth of Indirect Costs, Pricing Freedom, Fixed Expense Ratio, Strategic Considerations, Cost Reduction Effort, Analysis Frequency) can guide management in determining the answers. The fist five factors (PD, SD, CP, CA, FG) based on the probability. The second dimension of the model seeks to establish decisions. lY axis potential for ABC due to cost distortion---PD.SD.CP.CA.FG lX axis proclivity to use cost information in decision---PF.FE.SC.CR.AF To start management must analyze and responses to two key questions: 1. For a given organization, is it likely that ABC will produce costs that are significantly different from those that are generated with conventional accounting, and does it seem likely that those costs will be "better"? 2. If information that is considered "better" is generated by the system, will the new information change the dependent decisions made by the management? After finish these questions managers of company can discuses the ten factors that support or reject implementation. Finally, the combined weighted scores are plotted as a point on one of the four quadrants of a graph.Plotting the Answers--- Use Contingency Grid Method The steps in the