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Activity Based Costing

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Course Synopsis

Businesses face pressures to deliver cost efficient services in the face of escalating demands. These pressures have led to many initiatives to improve the management and efficiency of service delivery by means of Activity- Based Costing (ABC). Activity- Based Costing (ABC) is becoming increasingly prevalent in business environment, but many users do not understand the kinds of problems it was designed to solve. Managers who understand absorption costing will be better placed to evaluate whether the payment you receive from clients/customers is actually covering the real cost of the care delivered. Now, more than ever, managers need to understand the real cost of delivering services if they are to enable the organisation to navigate the challenges ahead and achieve sustained profitability and competitiveness. This course provides all you need to know to begin your ABC implementation project and the specific actions needed to effectively implement and use ABC. While some theory is presented, the bulk of the programme is devoted to demonstrating how ABC can be quickly and economically implemented.

Typical Course Outline

  • Describe the origins of Activity Based Costing (ABC)
  • Define Activity Based Costing
  • What is Activity Based Costing?
  • Factors leading to the development of ABC
  • Activity’ and ‘Cost Drivers
  • Activity Based Costing (ABC) v/s Direct Product Profitability (DPP) Analysis
  • Costing products or services using ABC
  • The overhead allocation system under ABC
  • Costs and benefits of implementing an ABC system
  • ABC in Decision-making
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