Pepsi co activity based costing abc
It can equally be applied in service sectors like banks, insurance, hospitals and other institutions providing services.
Online manager-net. ABC system can change the system of evaluation of new process technologies, to reduce setup times, rationalization of plant layout in order to reduce or lower material handling cost, improve quality etc. Apart from their narrow concern over efficiency and optimal profitability, the advocates of activity based approach have not attempted to explain why firms insist on using simple methods of allocation of overheads.
We are determined not only to make great drinks, but also to contribute to communities around the world through our Business Plan on Coca-Cola Ltd.
We cannot reduce the direct cost of the product, unless materials of cheaper value are used but we can control very much the overheads.
Issues with activity based costing
Dullesco Dan Carlo D. Why are they not producing these products? It's a special thing to have billions of friends around the world, and we never forget it. These include These non-manufacturing costs can be allocated easily using ABC because the relationship between costs and its causes is better understood. The activity based costing ABC finds high applicability in many companies since it seeks to eliminate the defects that are associated with traditional method such as accuracy and lack of consistency. It brings out very detailed information about the company processes in order to access the management capacity to allocate resources to those operations that are less costly Du, Precisely, the cost is put into pools so the organization may assign the processes that best reflect the manner in which costs are incurred. In addition, management should conduct regular business reviews to establish the performance of the current budget plan alongside reducing complexity and cycle time.ABC provides accurate cost information to evaluate the performance of the transferor and transferee departments. The activity-based costing method.
Related Articles:. Improvements in Performance: ABC involves preparing the statement of expenditure activity-wise and comparing it with the corresponding value addition to know the activities which are to be eliminated or need improvement for better performance of the organisation.
However, even if it appears that existing product costs are misleading, it may not always be necessary to incorporate ABC into the accounting system.
Therefore, it becomes necessary to have a costing system based on activity done. For example auditors