ABC Focus - for costing
Know your real costs then price and budget accordingly
The activities that a business does defines the busines:-
- A delivery company delivers goods.
- A medical practice sees patients.
A business engages in many activities. There are activities to take orders, send invoices, handle inquiries, clean the premises, mange the business, and so on.
An activity uses resources which have associated costs.
A good understanding of the underlying activities and their costs help to plan to achieve satisfactory margins and satisfied customers.
Cost of products / cost of services
A realistic estimate of the cost of products, services, customers and unused capacity is vital to successful business performance. ABC Focus software is a dynamic implementation of activity based costing and is used to cost products, services or customers.
The software includes ground-breaking tools for analyzing activities and viewing costs.
It is a tool which makes activity based costing concepts simple to understand and implement. It is an attractive package because of its flexible costing model, sophisticated cost analysis and consolidated reporting. It offers a very competitive pricing regime make it suitable for large and small business in virtually any industry or government.
See if your performances are within the expected range. If not establish what needs to be changed to improve future financial performance. Professional costing and intelligence are built into the software.
ABC Focus costs any aspect of the business
ABC Focus costs any aspect of the business or organization:
- Manufactured products
- Good bought in and sold
- Services provided
- Activity cost pools
- Cost objects.
Both direct and indirect costs are examined – you are guided through the costing and margin evaluation process.
Costs are assigned to products based on their usage of materials, expenses, facilities and people.
Direct costs include direct labour, materials and expenses and these are assigned directly to the products and services, or cost objects, which consume them.
Indirect costs (sometimes called “overheads”) include:
- service-related costs such as administration, computer and personnel department.
- customer related costs such as the sales department, maintenance and deliveries, etc.
We refer to these as activity cost pools.
The cost pools or overheads must be allocated in a meaningful way to the products or services (“cost objects”) of the organisation.
By using ABC Focus an organisation will have a better appreciation of its costs and activities.
The program acts as a guide through the analysis process and assists with the management of costs and activities. It will identify value-adding (and value-destroying) activities and products and aids with cost management and control.
ABC Focus also provides a structured approach to re-engineering the activities carried out in the business: can resource consumption be reduced and outputs maximized?
Activity based costing budget / output budget
The conventional approach to budgeting typically increments last year’s amounts.
A better approach is to look at the change in activities for the next period. If the delivery company is budgeting 20% more deliveries next period, it is better to do the budgeting based on the cost of activities. When the ABC model is setup, any changse in activities can easily be entered to see the new resources required, and their costs.
Why ABC Focus?
Know your costs
Determine total costs (direct and indirect) for products, services, processes, activities and unused capacity.
Identify expensive activities
Examine contributors to costs and draw attention to inefficiencies so managers can allocate resources to where they are more beneficial.
Know your most profitable and least profitable products and customers.
Comprehensive audit trails and integrity checks for data entry and analysis are built-in.
Composite cost objects
Composite cost objects can be created from the cost objects in a model.
Reporting is extensive.
Who needs this software?
ABC Focus can help with the following:
- Useful for obtaining costing information.
- Answers the question – what do things cost. Once the costs are known the software uses the built-in analysis tools to help remove or reduce unwanted costs that are in the current business activities.
- ABC Focus is based around the activities of an organization: “The activities done by an organization determines its nature.”
- All activities consume resources. ABC Focus helps to cost the activities and the cost the outputs of the organization
- These outputs can be products, services and customers.
- ABC Focus gives you a good approximation of the total real costs of products, services and unused capacity.
- ABC Focus can include capital costs.
- ABC Focus provides all the benefits of output based budgeting.
- Can be used to monitor costs every month and compare costs month to month.
- Can cost processes.
- Gain a competitive advantage from product, service, process and customer profitability analysis.
- Activity based budgeting improves your budget quality.
Any entity involved in the sale of goods or services will benefit by setting up an ABC Focus activity based costing model.
Activity based costing provides a more accurate basis for pricing.