CIMA考试辅导：Activity Based Costing （ABC作业成本法）

　　The concept of ABC was first defined in the late 1980s by Robert Kaplan and William Burns. Initially ABC focused on manufacturing industry where technological developments and productivity improvements had reduced the proportion of direct labour and material costs, but increased the proportion of indirect or overhead costs.

　　Comparison of traditional costing and ABC

　　The traditional method of costing relied on the arbitrary addition of a proportion of overhead costs on to direct costs to attain a total product cost. The traditional approach to cost allocation relies on three basic steps.

　　1. Accumulate costs within a production or non-production department.

　　2. Allocate non-production costs to production departments.

　　3. Allocate the resulting production department costs to various products, services or customers.

　　This type of costing system usually allocates costs based on a single volume measure, such as direct labour hours or machine hours. While using such a simplistic volume measure to allocate overheads as an overall cost driver, this approach seldom meets the cause-and-effect criteria desired in accurate cost allocation.

　　This method of costing has become increasing inaccurate as the relative proportion of overhead costs has risen. This distortion of costs can result in inappropriate decision making.ABC is therefore an alternative approach to the traditional method or arbitrary allocation of overheads to product, services and customers.

　　Application

　　In contrast to traditional cost accounting systems, ABC systems first accumulate overheads for each organisational activity. They then assign the costs of these activities to products, services or customers (referred to as cost objects) causing that activity.

　　The initial activity analysis is clearly the most difficult aspect of ABC. Activity analysis is the process of identifying appropriate output measures of activities and resources (cost drivers) and their effects on the costs of making a product or providing a service.

　　ABC systems have the flexibility to provide special reports so that management can take decisions about the costs of designing, selling and delivering a product or service. The key aspect is that ABC focuses on accumulating costs via activities, whereas traditional cost allocation focuses on accumulating costs within functional areas.

　　The main advantage of ABC is that it minimises or avoids distortions on product costs that might occur from arbitrary allocation of overhead costs.

　　Steps in development of an ABC System

　　ABC uses cost drivers to assign the costs of resources to activities and unit cost as a way of measuring an output.

　　There are four steps to implementing ABC.

　　1. Identify activities

　　The organisation needs to undertake an in-depth analysis of the operating processes of each responsibility centre. Each process might consist of one or more activities required to produce an output.

　　2. Assign resource costs to activities

　　This involves tracing costs to cost objects to determine why the cost occurred. Costs can be categorised in three ways:

　　i. Direct – costs that can be traced directly to one output. For example, the wood and paint that it takes to make a chair.

　　ii. Indirect – costs that cannot be allocated to an individual output, that is, they benefit two or more outputs, but not all outputs. For example, maintenance costs or storage costs.

　　iii. General/administration – costs that cannot be associated with any product or service. These costs are likely to remain unchanged, whatever output is produced. For example, salaries of administration staff, security costs or depreciation.

　　3. Identify outputs

　　Identify all of the output for which an activity segment performs activities and consumes resources. Outputs might be products, services or customers.

　　4. Assign activity costs to outputs

　　This is done using activity drivers. Activity drivers assign activity costs to outputs (cost objects) based on the consumption or demand for activities.

　　ABC in practice

　　ABC activities have been around for nearly 20 years and many companies in a variety of sectors have implemented activity based thinking. ABC and ABM have brought about radical changes in cost management systems. The principles and philosophies of activity based thinking apply equally to service companies, government agencies, process and manufacturing industries.

　　Management practices and methods have changed over the last decade and will continue to change. Organisations have moved from managing vertically to managing horizontally. There has also been a move from a function orientation to a process orientation.

　　However, management information systems to track and provide information about the horizontal aspects of business have lagged significantly behind managers’ needs. ABC and ABM fill this information gap by providing cost and operation information that mirrors a horizontal view.

　　ABC focuses on accurate information about the true cost of products, services, processes, activities and customers. Using ABC, organisations gain a thorough understanding of their business processes and cost behaviour during ABC analysis. Management then applies this insight to improve decision making at operating and strategic levels. This is then known as ABM. Simply, ABM is ABC in action.

　　　　

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