Communiquez avec les autres et partagez vos connaissances professionnelles

Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.

Suivre

What are the steps of the establishment of a system of costs by activity?

user-image
Question ajoutée par Nadjib RABAHI , Freelancer , My own account
Date de publication: 2016/06/25
Nadjib RABAHI
par Nadjib RABAHI , Freelancer , My own account

The steps in the implementation of a system of costs per activity are:

  • Identify activities that consume resources
  • Determine and allocate all direct costs to cost objects
  • Determine resource drivers to share out the indirect costs to each activity
  • Determine activity drivers to link the costs of activities to cost objects
  • Identify and share out all indirect costs for each activity
  • Calculate unit costs of activities (or activity imputation rate)
  • Calculate total activity costs charged to the cost object
  • Use of activity costs for decision making

The concept of cost object is a useful concept to identify and track costs.

Examples of cost objects are :

  • cost of a specific product or service
  • costs incurred by a department or responsibility center
  • costs incurred in a specific operation or activity
  • costs incurred by a particular contract.

Vaiyapuri Gopalakrishnan
par Vaiyapuri Gopalakrishnan , Manager - After Sales , M/s Saud Bahwan Automotive llc

Activity-based costing is more refined approach to costing products and services than the traditional costing method. It involves the following steps: Identification of activities involved in the production process; Classification of each activity according to the cost hierarchy (i.e. into unit-level, batch-level, product level and facility level); Identification and accumulation of total costs of each activity; Identification of the most appropriate cost driver for each activity; Calculation of total units of the cost driver relevant to each activity; Calculation of the activity rate i.e. the cost of each activity per unit of its relevant cost driver; Application of the cost of each activity to products based on its activity usage by the product.

sardar mardookhy
par sardar mardookhy , Head of portfolio management department , MCI

agreed with mr. vaiyapuri.............

Ahmed Mohamed Ayesh Sarkhi
par Ahmed Mohamed Ayesh Sarkhi , Shared Services Supervisor , Saudi Musheera Co. Ltd.

Agree with expert ansewrs above

 

Emmanuel Wamweta
par Emmanuel Wamweta , production supervisor , Tembo Steel Rolling

I fully agree and endorse mr. Vaiyapuri's wonderful & insightful submission.

Thanx for the invitation

Junardo Templo
par Junardo Templo , System Maintenance Technician , Dallah Trans Arabia

no idea coz i am not in the admin job.

More Questions Like This