In this video, learn how to structure your ABC model in a logical, flexible, and orderly fashion, and why this should be undertaken prior to building the model's calculations.
- As you may recall, there are three key steps … of activity based costing, cost pools, cost objects, … and lastly, activity drivers. … Now as you can see, there's quite a logical structure … to the design of an ABC. … And, it's also logical how we progress through each stage … of the process. … So given we have invested all this effort … in a structured design and methodology, … how about we continue this journey in the model itself? … I encourage you to follow along with me … by having Excel open with the exercise file for this video. … As you can see here in the lists worksheet, … we have a separate column for each of the ABC steps. … That is cost pools, cost objects, … and lastly, activity drivers. … We can always come back and add items to this list … down the track as we make changes to the model. … Now if we really want to get fancy, … we can apply something called cell validations here, … but that's a whole other topic. … Okay, there are several ways that we can achieve … this next step. …
- Why use activity-based costing (ABC)?
- How ABC can help organizations make more informed decisions
- Defining cost objects and activity drivers
- Reviewing source data
- Building the ABC model
- Preparing ABC reports
- Advising stakeholders on outcomes