Activity Based Costing
Using Activity Based Costing (ABC), Acton Consulting assists organizations in determining the true cost of products, customers, and sales channels. ABC is a decision support methodology that defines and costs activities and assigns the cost of each activity to products and services according to the actual consumption.
A typical ABC project would have Acton examine business activities that are indirectly associated with production or service delivery (e.g. purchasing, sales, information systems, customer support, engineering, marketing, design, order processing, quality assurance and maintenance), to:
- Enable costs to be assigned more accurately
- Identify where to concentrate efforts for improvement
- Identify unprofitable customer accounts and products/services
- Restructure prices and services to reflect the true costs of service delivery
Acton’s principle consultant Emily Brodeur has extensive experience with Activity Based Costing, including projects with several publicly traded companies. Her experience includes designing and documenting Activity Based Costing models and interpreting/analyzing the results for various levels of management. The ABC method was also used for determining product/service mix, and to assist in business process improvements.
Sample Acton Experience:
Provincial Management Board
Acton instituted the ABC methodology for this organization to provide the most accurate fee structure and reduce cross subsidization in the system. The organization had several of low profitability products, and it was anticipated that an increase in fees should promote higher customer adoption of these low volume products. The ABC methodology allowed us to improve utilization, reduce costs, and dramatically increase profitability.
Government of Canada Ministry
Acton used an activity based costing approach to help a Government of Canada Ministry determine the costs associated with offering various services. The costs identified in this study were used to set fees in the national parks.
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