Activity Based Costing (ABC) Model Implementation in Dominos Enterprise Limited

HI5017 Managerial accounting
1

Contents
Executive Summary:........................................................................................................................3
Introduction......................................................................................................................................4
A) An explanation of ABC model and its features................................................................5
B) An explanation of how ABC model aligns with the current goals and strategies of the
company.......................................................................................................................................7
C) Provide at least two (2) recommendations about the implementation of ABC model for
your company based on your research findings..........................................................................8
D) Apart from ABC model, suggest one other management accounting tool suitable for your
company and justify it.................................................................................................................9
Conclusion:....................................................................................................................................11
References......................................................................................................................................12
2

Executive Summary:
Activity based costing (ABC) is a tool used for analysing costs and profitability which is based
on organisation processes and production. In other words ABC is a technique which aid in
managerial and strategic decisions such as identification, outsourcing costing, pricing and
measurement. Here in Dominos Enterprise Limited which is (ASX Listed) the top most level
executives like senior managers, Board of Directors and CEO have improved their
management accounting system with the introduction of ABC model in their management
system.
3

Introduction:
Dominos enterprises are a brand, simply a pizza restaurant chain. Dominos is an ASX Listed
company which is engaged in restaurant chain. Dominos has a good franchise in the whole
world. The organization has series of operational activities which incurs costs and is require
maintaining costing activities. This report will make analysis about ABC model which stand for
activity based costing. It analysis is a process of classifying inventory items based on
consumption value. This approach is based on Pareto principle which helps in inventory
management. To implement this ABC technique the management access the cost and demand
information per item. Benefits of this approach is to have better control over high value
inventory level so that it reduces cost and improves benefits.
4