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Corp Travel Company Assignment PDF

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Added on  2021-06-17

Corp Travel Company Assignment PDF

   Added on 2021-06-17

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CORP TRAVEL COMPANYACTIVITY BASED COSTINGMODELCosting MethodsName of the Author
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EXECUTIVE SUMMARYThe current report focuses on the implications that the Activity Based Costing modeltechnique can have on the information provided to the top management under managerialaccounting. For the same, the example of a leading Australian company, Corporate TravelManagement is taken. By management team, it means CEO and the other senior managers.The initial part of report emphasises on the meaning that the ABC model pertains to and thefeatures that adorn it. Strategies and current goals of the above-mentioned company areidentified along with its mission and objectives.
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Table of ContentsINTRODUCTION.................................................................................................................................3ACTIVITY BASED COSTING MODEL.............................................................................................3MEANING........................................................................................................................................3FEATURES OF ACTIVITY BASED COSTING.............................................................................3ALIGNING ABC MODEL ACCORDING TO MISSION AND STRATEGIES OF CORPORATE TRAVEL MANAGEMENT..................................................................................................................4MISSION AND OBJECTIVES OF COMPANY..............................................................................4STRATEGIES OF CORPORATE TRAVEL MANAGEMENT.......................................................4CONTINUED GROWTH AND SERVICE EXCELLENCE........................................................5CLIENT FACING INNOVATION...............................................................................................5PRODUCTIVITY AND INTERNAL INNOVATION..................................................................5LEVERAGING SCALE AND GEOGRAPHY.............................................................................5THEIR PEOPLE............................................................................................................................5BENEFITS IN APPLYING ABC MODEL IN CORPORATE TRAVEL MANAGEMENT...........6RECOMMENDATION FOR IMPLEMENTATION OF ABC MODEL IN CTM...............................7ALTERNATE MANAGEMENT ACCOUNTING TOOL RECOMMENDED....................................8Conclusion.............................................................................................................................................8References...........................................................................................................................................10
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INTRODUCTIONActivity Based Costing is the most celebrated tool in managerial accounting, especially in themanufacturing sector. As the name suggests, the cost allocation under this technique is basedon the relationship between the activities that the concern does and the respective products. Itis an improved method over the traditional approaches of cost allocations. In this approach,the level of activity is the measure of the distribution of indirect costs, as the direct costs arealready attributable to the specific activities or product. In the report under study, thecompany chosen for analysis is Corporate Travel Management, one of global giant corporatethat customises the travel needs of businesses. This report highlights the company’s missionsand objectives with its corporate strategies. The role of Activity Based Costing model inimproving the management accounting and the recommendations related to the same areversed. The ABC model is incorporated to understand how it can help the corporate toachieve its corporate strategies and recommendations for the same are given in the secondpart of the report, based on the research findings. In the concluding section,ACTIVITY BASED COSTING MODELMEANINGAny kind of activity or production or business incurs both direct and indirect costs in theprocess. Indirect cost is not directly attributable to any output, are required to be divided onsome justified basis. Activity Based Costing has come as a saviour by judicially attributingcost based on resources used by each activity and the total cost incurred. Various bases areused as a base for distribution and are known as cost drivers, e.g. power consumed, machinesetups, maintenance request, production order etc. Here in this method, the machine hours ordirect labour hours are not used as a basis for allocation. It is the much-improved manner ofdisbursement as it’s directly linked to the extent a department or section performs an activitywhich generates a cost (Lee, & Kao, 2011). It is observed that if the proper ABC modelcosting is used then it will increase the overall outcomes and efficiency of the business atlarge.
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