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Activity based costing
Transcript of Activity based costing
5pcs an order, and they will have customer audit each month
Lean team says they have eliminated 2hrs in the process how much did we saved? The other plant is fine with 5 supplier quality engineers, why you need 8? even lower output more people in logistic, quality no idea don't know, I'll lay off 3 people Why Where to use
T o b e s o l v e d http://hbswk.hbs.edu/item/5657.html sustainable savings
support lean activity
support customized quotes
proper customer profitability
? Proper allocations Cost saving Quoting Management briefing Collecting information for model Build team Train team members Collect data Input data to model Clean up data, translate Introduction, commitment Data collection Feedback, harvest Survey form Database for model Process Tools Feedback, present results Define further steps Define driver sources does the mappings, like Extended information collected about process quality and performance
to help process improvement in implementation phase
All information validated by the process owners themself
Structure of the survey form (spreadsheet) looks sg similar like this Simple spreadsheet Extended data collection One for each job function Job functions to cost centers Resources to ledger account Ledger account to booked costs Activities to company process map further it allows to create reports like Costs by activity Costs by customer Time spent by process Costs by cost driver
Wastes by process Costs spent in reactive actions More then 20% of activites are reactions to quality problems Cost variability in overhead has been estimated Efficiency of overhead processes estimated Improvement possibilities identifed, by wastes in the activities TOP wastes
#3 overprocessing Intersting: 10% of time is spent with meetings PAYBACK? PAYBACK? PAYBACK? Please note this is a simplified approach of ABC method
It does not fully supports a complete activity based costing system.
It was meant to understand the core characteristic of the business of a plant in Hungary, and support proper overhead cost allocations
For more detailed informations please check relating books from Robert S. Kaplan http://www.flickr.com/photos/eurleif/186807027/#/ http://www.flickr.com/photos/23065375@N05/2247354638/ http://www.flickr.com/photos/question_everything/4051906398/ An implementaion example THANK YOU Conventional costing approach Define process map Something like this... source: Robert S. Kaplan: Cost and effect