Introduction to Activity Based Costing
Learn how ABC system is better than traditional costing systems through a practical example
Finance & Accounting,Cost Accounting
Lectures -11
Duration -1.5 hours
30-days Money-Back Guarantee
Get your team access to 9000+ top Tutorials Point courses anytime, anywhere.
Course Description
Traditional cost accounting spreads out overhead and indirect costs over product cost, based on a random and inaccurate driver such as manufacturing cost, labor hours, units sold, revenue, etc. This results in over- and under-allocation of some products and customers, which can distort the profitability of products and customers. This can lead to misinformed management, and decisions to prioritize certain products or customers can have disastrous outcomes because of it.
Activity-based costing (ABC) is mostly used in the manufacturing industry since it enhances the reliability of cost data, hence producing nearly true costs and better classifying the costs incurred by the company during its production process.
ABC is used to get a better grasp on costs, allowing companies to form a more appropriate pricing strategy.
Step by Step ABC calculation is as follows:
· Identify all the activities required to create the product.
· Divide the activities into cost pools, which include all the individual costs related to an activity—such as manufacturing. Calculate the total overhead of each cost pool.
· Assign each cost pool activity cost drivers, such as hours or units.
· Calculate the cost driver rate by dividing the total overhead in each cost pool by the total cost drivers.
· Divide the total overhead of each cost pool by the total cost drivers to get the cost driver rate.
· Multiply the cost driver rate by the number of cost drivers.
In this course we will take you through the practical aspects of each step one by one.
Who this course is for:
- finance managers
- business leaders
- cost accountants
- accounting professionals
- factory managers responsible for costing decisions
Goals
What will you learn in this course:
What is Activity based Costing (ABC)
Steps in implementing ABC system
How ABC system is different from traditional costing methods
Benefits of implementing ABC system
Case Study to understand practical implications
Prerequisites
What are the prerequisites for this course?
Prior understanding of basic cost accounting would be ideal
Curriculum
Check out the detailed breakdown of what’s inside the course
Introduction
11 Lectures
- Activity Based Costing 50:30 50:30
- What is activity based costing 13:49 13:49
- Functional Based Costing and Differences 06:42 06:42
- Designing ABC System 00:38 00:38
- Steps 1 -Identify activites & Cost Pools 06:52 06:52
- Steps2 - Activity Cost Driver 01:09 01:09
- Step3 - Assign Cost to Activity Pools 04:42 04:42
- Steps 4 -Calculate the Activity Rates 03:01 03:01
- Steps5 - Assign Cost to Objects 03:28 03:28
- Step6- Reporting and Monitoring 02:59 02:59
- Final Videos with more examples 22:44 22:44
Instructor Details
Manish Gupta
Hospitality Finance Expert and Business StrategistMr Manish Gupta is an experienced hospitality finance professional, having a blend of financial core expertise with hands-on training in managing hotel operations and business development.
Having worked as an Auditor for 7 years, he moved into finance management for brands like Parsvnath Developers and Shangri-La Hotels & Resorts and currently serving as the CFO of HTOO Hospitality.
His role is to spread the finance function for the largest hospitality in Myanmar owned and managed by one of the biggest business houses in Myanmar. They have 16 operational and under development High-end boutique resorts (covering an overall room inventory of 800+ rooms), 2,000 employees. Most of the properties are leaders in their region on trip advisor and won various travel awards over a period of time.
He has proven experience in setting up the foundation for sustainable growth (in the form of management information systems, restructuring), ERP implementation, gear towards IPO readiness & IFRS convergence. With such a great skill set, the students can be assured about the quality of training with his expertise.
He has been teaching at various institutions in Myanmar such as Swiss Business School, American Hospitality Institute of Myanmar with students ranging from directors to CEO of various companies.
ACADEMIC & PROFESSIONAL CREDENTIALS
Chartered Accountant – 2005 (Member of the ICAI) form Institute of Chartered Accountant of India
Company Secretary – 2005 from Institute of Company Secretaries of India
DISA (Diploma in Information System Audit) Supervisory Excellence (Online) & Business Leadership form e-Cornell University
Strategic Leadership from Shangri-La Global University
Course Certificate
User your certification to make a career change or to advance in your current career. Salaries are among the highest in the world.
Our students work
with the Best
Related Video Courses
View MoreAnnual Membership
Become a valued member of Tutorials Point and enjoy unlimited access to our vast library of top-rated Video Courses
Subscribe nowOnline Certifications
Master prominent technologies at full length and become a valued certified professional.
Explore Now