logo

The Cost Management System of Organizations

   

Added on  2020-05-16

11 Pages2484 Words76 Views
Running Head: Business Management1Business Management
The Cost Management System of Organizations_1
Business Management2Executive summary:Model of Activity based costing is introduced for managing the cost management system of organizations and this technique becomes very popular in the management circles. This model includes various actions such as it calculates the baseline of the business operations and also involves testing on continuous basis. However all these activities are very costly and time consuming. New version of this model which eliminates all the shortcomings of this model is developed by the Kaplan and Anderson, and they referred this model as time-driven activity based costing. This new method of costing decrease the data requirement and mainly include twoparameters only that are capacity and cost related to resources and required time for conducting any activity. This paper considers the meaning and different aspects of time-driven activity based costing, andanswer the question whether private organizations can rely on this costing technique.
The Cost Management System of Organizations_2
Business Management3ContentsExecutive summary:....................................................................................................................................2Introduction:...............................................................................................................................................3Information related to Client:......................................................................................................................4TDABC approach & features:.......................................................................................................................5Difference between TDABC and other costing methods:............................................................................6Time driven approach and original model of ABC:..................................................................................6Time driven approach and other traditional methods:...........................................................................7Reliability of Wesfarmers on TDABC:...........................................................................................................8Conclusion:..................................................................................................................................................9References:................................................................................................................................................10Introduction:During the period of 1980, method of activity based costing (ABC) is introduced for the purpose of addressing the issues arise from traditional methods of cost management. However, traditional
The Cost Management System of Organizations_3
Business Management4methods of costing consider only few categories of cost that are labor, material, and overhead. This can be understood through example, companies engaged in manufacturing process only determine the elements of labor and material and these elements are used by the products manufactured by company on individual basis. Indirect cost and support cost is allocated by the cost system of these companies in accompany of those measures which are already determined by the company such as direct hours of labor and direct labor dollars. After some time, this approach of cost creates issues for organizations and this result in original model of ABC. Later, this new model also creates issues in case of large scale organizations. However, elimination of this model is not the solution, and because of this new version of this model is developed which removes all the disadvantages of original model. This new model of ABC is known as the Time-Driven Activity-Based Costing (TDABC) (Kaplan & Anderson, 2004).TDABC is very simple model and easy to operate and it helps the organization in calculating the cost and capacity consumption of their resources. It ensures effective and efficient way of managing the cost system in the organization which improves the cost management system of theorganization. TDABC also help the mangers in getting accurate and reliable information related to cost and profit because of which it becomes easy for mangers to manage the project. TDABC also maintain the relationship between the customers and the organization (Akhavan, ward & Bozic, 2016). Structure of this report includes the brief information about the client that is Wesfarmers, discussion on TDABC and its aspects, difference between TDABC and its original model & TDABC and other traditional methods of costing, suitability of TDABC in case Wesfarmers. Lastly, paper is concluded with brief conclusion. Information related to Client:During the period of 1914, company named as Wesfarmers was established in the form ofWestern Australian farmers' cooperative. After some time this company becomes the largestlisted companies in Australia. Global headquarter of Wesfarmers is established in Western Australia and this company conductvarious business such as supermarkets, hotels, liquor, and convenience stores. This company isthe largest employer in the private sector and employed almost 22000 employees in its premises.Shareholders base of this company is also strong as it includes almost 530,000 (Wesfarmers,n.d.).
The Cost Management System of Organizations_4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Report on TDABC model in Private Organization
|12
|2522
|88

HI5017 Business Management Assignment - BHP Billiton
|13
|2504
|129

SUITABILITY OF TDABC IN FABTRONICS
|15
|2726
|230

Assignment - Managerial Accounting
|11
|2806
|135

Measurement and Management of Unused Capacity in TDABC System
|75
|33738
|363

MANAGERIAL ACCOUNTING 1 MANAGERIAL ACCOUNTING Managerial Accounting Name of the University Student Name
|13
|3230
|280