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Understand the True Cost of Your Business
Activity-Based Costing (ABC) is a methodology in which activities are the primary objects in calculating the cost of products and services. ABC data provide companies with the insights to perform Activity-Based Management (ABM), which are managerial actions, needed to achieve value for both customers and shareholders.
Activity Based Costing (ABC) is a managerial accounting system which determines the cost of activities without distortion and provides management with relevant and timely information. The traditional costing methods prove to be inadequate if not dysfunctional and misleading.
What to expect from the programs
If you have heard of the concepts of Activity-Based Costing and Activity-Based Management, but still question and speculate how to implement them, then the following programs can provide you with the solutions!
If you do not know anything about ABC or ABM, the programs will provide you with the knowledge, and why companies around the world are adopting this tool for better performance.
You will Learn:
- Concept of activity-based costing / activity-based management
- Why your current cost information is unreliable
- How to determine true costs of your business
- How to identify factors that drive costs
- To evaluate the benefit of ABC / ABM
- The integration of TQM, JIT, BPR, EVA and ABM for better business performance
- How to use ABM to streamline processes, reduce overheads and create value
- How to design and model an ABC / ABM system
- Overcome misconceptions, fears and barriers
- How to succeed at implementing ABC / ABM
The ABCs of ABM Program
1. What is Activity-Based Costing?
- Look MA, What’s the Use?
- Overhead Kills
- Relevance Lost
- Why Activities?
- Is Tradition Wrong?
- The 3rd (Necessary) Stage
- Benefits of ABC
2. The Mechanics of ABC
- CAM – I Have The Cross?
- Resources or Costs?
- The Verb Word
- What Are COs?
- Change Drivers
3. What is Activities-Based Management?
- A New Philosophy
- ABC Relationship to ABM
- Unifying Management Tools
- Focus of ABM
- Benefits of ABM
- ABM and Balanced Scorecard
4. Putting ABC/M into Practice
- Building an ABC Model
- Mining the ABC Database
- Case Studies – AMD, Boeing, Coca-Cola
- Why Use Modeling Software?
- Demonstration of an ABC software
5. Is ABC/M For Me?Facing The Truth
- Not Just for Manufacturing
- The Need for Change
- Overcoming Barriers
- Success Stories
- Insights Into Implementation
- The Next Step
Successful ABC / M Projects Implementation
Do You Know The True Costs of Your Business?
Managers and business analysts are aware that conventional financial accounting and costing systems do not provide accurate cost information. Activities-based costing (ABC) is not just another costing methodology. In fact, it is a decision-making technique based on true and complete costing. Professors S Kaplan and R Cooper, two of the most innovative thinkers on cost management have conceptualized and demonstrated how activity-based costing can help drive profitability and business performance.
About This Seminar…
This seminar aims to help you understand, implement and use Activity-Based Costing (ABC) and Activity-Based Management (ABM). It will take participants through the steps of a structured methodology used by many corporations to implement ABC and ABM. Participants will also learn how to build ABC models and to use these models for managing resources, costs, process, profitability and performance.
Why You Should Attend…
This seminar will directly benefit both managers and analytical staff responsible for decision making that has impact on the value received by customers and profit earned by the business. From managing directors to line supervisors, and specialists in finance & accounting, corporate planning, customer relations management and supply chain management should attend this seminar to learn how to implement an innovative tool.
Topics Covered
You will learn and add value for your company!
- The concepts of ABC/ABM
- Better management decisions with ABC/M
- Components of ABC/M system
- Approach to implementing ABC/M system
- 7-steps structured methodology
- Secrets of successful ABM implementations
- Case studies of ABC/M companies
- How to build ABC models
- How to use ABC software
- How to overcome misconceptions, fears and barriers
- How to manage ABC/M projects
- How ABM is used to streamline processes, reduce overheads and create value
Activities-Based Costing and Activity-Based Management Modeling Workshop
This extended two-day, intensive executive program provides all you need to know to begin your ABC implementation project. Participants learn specific actions needed to effectively implement and use ABC. While some theory is presented, the bulk of the pro-gram is devoted to demonstrating how ABC can be quickly and economically implemented. Participants should prepare them-selves for a unique learning experience designed to achieve quick and sustainable results.
Key Topics:
Executive Overview of Activity Based Costing (ABC) and Activity Based Management (ABM)
· How the need was created for better cost accounting
· How to compare traditional and activity based cost reports
· Macro level Activity Based Costing
· Micro level Activity Based Costing
· Reasons for cost accounting and ABC
· Elements of financial costing, competitive costing, and
managerial costing
· New P & L formats
· How to use Activity Based Costing to support Activity Based
Management
· The importance of data integrity
Principles of ABC/ABM
· Important principles of ABC
· How not to take a good idea too far
· ABM: a systematic approach to eliminate waste
How to Implement ABC - A Nine Phase Plan
· The best way to approach an ABC/ABM implementation
· The importance of mobilizing employees early in the process
Phase 1-Preparing the company for ABC/ABM
· Defining ABC/ABM mission
· Determining the technical, organizational, cultural and
external impediments to implementing ABC
· Determining training requirements
· Developing innovative cost reports including contribution
focused product line P&Ls
· Identifying accounting rules
· Identifying regulatory, statutory, FASB and GAAP conflicts
Phase 2-Organizing to implement ABC
· Developing a reasonable implementation plan
· Determining the necessary resources for implementing
ABC/ABM
· Organizing a cross-functional implementation team
· Analyzing why some ABC/ABM implementations fail and how
your company can succeed
Phase 3- Developing a data integrity process
· Impact of poor data in any cost model
· How to develop a formal data integrity process
Using Missing Data reports
Using Cyclic Data Certificate reports
Executive data integrity monitoring
· Leadership benefits from solving the data integrity problem
Phase 4-Determining the real sources of product cost
· How to define activity centers
· How to identify and differentiate Production Activity Centers
(PACs) and Support Activity Centers (SACs)
· How to segment SACs into Factory Support Activity Centers
(FSACs) and Business Support Activity Centers (BSACs)
· How to replace cost center, work center, profit center, and
department definitions with new activity center definitions
· How to create the necessary general ledger accounts and
interfaces
Phase 5-Describing the activities performed in each activity center
· How to determine each activity center's resources and create
a 'resource schedule'
· How to identify and document significant activities performed
in each activity center
· How to develop activity center specific definitions of
'value-adding' (VA), 'non-value-adding' (NVA) and
'non-value-adding-required' (NVAR)
· How to determine each activity center's 'customers'
· How to determine and document the level of effort required
to support each internal 'customer'
· How to use the 'resource schedule' and 'activity analysis' to
immediately begin reducing costs
· How to rank and select waste elimination projects using the
2 2 4 2 matrix
· How to mobilize employees to eliminate non-value-added
activities themselves
Phase 6-Determining the relationships of cost sources
· How to describe the relationships between production and
support activity centers
· How to allocate individual cost partitions (instead of total
activity center costs)
· How to develop a cost flow map
Phase 7-Developing an 'Activity Center Performance and Cost Diagnostic' (ACP&CD) tool to describe the total costs of each activity center
· How to develop and use cost diagnostic tools
· How to define the sequence of activity centers to analyze
· How to link diagnostic tools and invent new allocations rules
· How support costs can be automatically allocated via an
activity model
· How to test diagnostic values by performing a 'slice' analysis
Phase 8-Calculating other allocation values
· How to develop a Material Acquisition Burden (MAB)
diagnostic tool
· How to develop a Product Line Support Overhead (PLSO)
diagnostic tool
· How to develop an Unmodeled Overhead (UO) diagnostic tool
Phase 9-Using Activity Based Costing to make decisions
· How to 'roll up' material, labor, burden and overhead into an
activity based product line P&L
· How to use ABC within the confines of an existing database
· How to flow cost data into segmented P&Ls
· How to develop a Product Cost Portfolio Report
· How to replace financial reporting with causal metrics
Beyond ABC...Extending ABC into Predictive Cost Modeling
· Defining Predictive Cost Modeling (PCM)
· Understanding the comprehensive cost management
database
· Using ABC to predict product line costs
· Using ABC to understand all sides of any business decision
· Extending the Product Cost Portfolio Report into
PCM...turning ABC into a powerful decision tool
· Creating a simulation tool for predicting cost changes which
result from multiple and concurrent cost parameter changes
Special Feature
Participants are invited to attend a dinner the first evening of the program, which provides an opportunity to share information and ideas with the instructor and other participants.
Participants Will Receive:
· Time phased PERT implementation plan
· ABC software models
· ABC implementation worksheets
During the program participants will operate a simulation model, which demonstrates how product costs can change as multiple operating parameters are changed elsewhere in the organization.
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