Once upon a time, the two major inputs that a business required to produce a product were its labour and raw materials. However, in the modern production environment, manufacturing often involves a high degree of mechanical and computerised input. Direct costs like labour and materials can make up much less of the total costs, whilst overheads are much more significant. In these situations, traditional costing methods such as marginal and absorption costing can be too simplistic in their approach, leading to cost estimations that don’t reflect the true cost of a product.
Luckily, activity-based costing (ABC) provides a suitable alternative to traditional costing methods in the modern manufacturing environment. In this course, we’ll take you step-by-step through how to use ABC to calculate the cost of a unit of product. We’ll also look at how the information from ABC can be used to inform decision-making and improve organisational performance – a concept referred to as activity-based management.
Provides 8 hours of CPD
- How to perform activity-based costing (ABC) so you can accurately cost an organisation’s products using this method
- How to correctly identify cost drivers, cost objects, cost pools so that you can assess how useful ABC will be to an organisation, as well as undertake the ABC process itself effectively
- The differences between ABC and absorption costing, so that you understand how and why the two systems produce such different results
- The advantages and disadvantages of ABC so that you can determine when it would be beneficial to implement in an organisation and when it wouldn’t
- What activity-based management is and how it can be used by organisations that have implemented ABC to improve decision-making and organisational performance
- Activity-based budgeting and how it can be used to create more accurate budgets in organisations that have implemented ABC
- Techniques for better understanding and managing the sources of costs in an organisation, including Pareto analysis, direct product profitability, customer profitability analysis and distribution channel analysis
Applying what you learn:
This course also provides a series of practice questions that will solidify your knowledge of activity-based management. Completing these questions alongside the course will ensure that you take on board everything you need to know to identify which activities are driving costs and make effective decisions accordingly!
What’s included in the course?
- Thoroughly explores the concepts, theories and models for this topic
- The content is professionally explained by our expert tutors alongside a visual presentation
- Come with downloadable audio files so you can listen to the content offline and on the go
- Full coverage of the video content using engaging and easy-to-follow language
- A range of examples to show you how these concepts might apply to real-life situations, e.g. in finance
- A practical exercise for each module based on the subject’s application in a finance team
- A series of questions designed to test your understanding of what you’ve learnt on the course
- Designed to get you to apply what you’ve learned to scenarios and commit the theory to memory
- The visual presentation from the video can be accessed for note-taking and for browsing alongside the video or audio download
- Can be viewed as still slides or in an interactive format to move around the screen
Purchasing the course
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