An Introduction to Activity-Based Management

Course Description: What factors drive the costs in your organization? How can you relate financial information to your business processes? Activity-based management is a cost management approach that identifies the processes involved in supplying a product or service and the resources that these processes consume. It highlights information for action which management can then use to reduce costs and boost the profitability of the organization. ABC can provide a bridge between the financial and operational side of the business, uncovering the true costs of products, processes, or services that are hidden in the financial reports.

This seminar provides an introduction to activity based costing. It explains the difference between activity-based costing and activity-based management and discusses those situations where ABC is most appropriate. It provides a practical, hands-on approach so that you can apply ABC concepts to any costing situation.

In this seminar, you will learn how to perform an activity analysis and calculate activity costs within your organization. You will discover how to apply ABC principles to obtain more accurate costs and understand the cost of crossfunctional processes or services in your organization. You will also learn how to use ABC to identify and target cost improvement opportunities.

Pre-requisites: This course is taught at an intermediate level. Participants should have completed the courses Understanding Financial Information, Basic Cost Concepts or their equivalent before taking this course.

Pre-work: Not required.

Who should attend: Managers and supervisors in manufacturing or service industries, professional employees (planners, engineers, buyers, analysts), CPAs, CMAs, financial accountants, financial analysts, cost accountants, cost analysts.

Course Objectives: Upon completion of this seminar, you will be able to:

Define the basic concepts of activity-based costing (ABC) and activity-based management (ABM).
Identify those situations where ABC is most appropriate.
Explain how to perform an activity analysis.
Explain how to cost an activity
Discuss how to assign activity costs to products or services.
Apply ABC principles to improve the costing process in your organization.

Course content:

Symptoms of an obsolete cost system
The evolution of ABC systems
The uses of ABM and ABC
What is ABM/ABC?
When is ABC appropriate?
Where ABC can add value?
ABM/ABC – A suggested approach
How to perform an activity analysis
How to calculate the cost of an activity
- Understanding cost behavior patterns
- Identifying the most appropriate activity measure
How to assign costs using ABC
- Developing the bill of activities

Instructional method used: Group-live

Recommended CPE: 7 credit hours

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