Activity Based Costing Analysis: Associated British Foods Presentation

This presentation provides a comprehensive analysis of Activity Based Costing (ABC) and its application to Associated British Foods (ABF). It defines ABC, compares it with traditional costing systems, and details the ABC approach within ABF, including resources, resource drivers, activities, activity drivers, and cost objects. The presentation further explores the advantages and disadvantages of ABC for the business, contrasting it with traditional costing techniques. It emphasizes why ABC might be preferred, highlighting its accuracy and relevance in cost measurement. The report concludes with a summary of key findings and references supporting the analysis.

BMP5006 Financial Management & Decision
Making
Assessment 1 - Presentation

Activity Based Costing Of
Associated British Foods
Organisation

Content
• Definition of Activity Based Costing
• Comparison with other costing systems
• Activity Based Costing of Associated British foods organisation
Resources
Resource Drivers
Activities
Activity Drivers
Activity Cost Drivers
Cost Objects

Content
• Advantages of the business using ABC
• Disadvantages of the business using ABC
• Traditional Costing Techniques
• Why Activity Based Costing (ABC) might be recognised as beneficial in
preference to Traditional Costing Techniques

Definition of Activity Based Costing (ABC)
• The activity based technique is referred
as the technique of management
accounting which are formulated to
assign the particular resources costs to
the different product's substance by the
organization.
• The activity based costing is helps in
company management by assure a better
understanding of product cost,
customers cost and profitability of the
business.

Comparison with other costing systems
• The activity based costing are compared with the traditional
costing systems. The activity based is more accurate than the
traditional costing systems.
• The activity based costing is the multi cost driver while the
traditional costing is single cost driver.
• In the context of orientation, the tradition is the cost driven and
the ABC is the process driven.

Activity Based Costing of Associate British foods organisation - Resources
• The Associate British foods to
assigns the overhead activities cost
of the business to the particular good
and services it produces and deliver.
• The ABC assign the indirect and
overheads cost reduce as well as
focus on the relation between the
overheads activities, costs and
manufacturing related products and
services offered by the Associated
British foods.

Activity Based Costing of Associated British foods organisation – Resource
Drivers
• Resources drivers is referred as the measure of quantity of
resources which are consumed and need by an activity.
• It helps in traced the appropriate portion of cost to the activity in
the Associated British foods.
• It is the percentage of total square feet of space which are
occupied by an activity of organization.

Activity Based Costing of Associated
British foods organisation – Activities
• The cost accounting is based on the activities which include the events of
organization, work, specific goals such as design products, set machines for
the production, operating machines and distributing finished goods.
• The activities of company are consider the cost objects and consume the
overhead resource's.

Activity Based Costing of Associated British
foods organisation – Activity Drivers
• The activity drivers is referred as the activity drivers analysis that
analyses and identifies the factors which pertain in the costing of
products and services as a component of activity based costing.
• In the Associated British food's company, the ABC system
understand the relation between the overhead activities,
manufacturing products and costs.
• It helps in evaluate the company expenses with the management.

Activity Based Costing of Associated British
foods organisation – Activity Cost Drivers
• The activity cost drivers is the casual factors of company and it causes the cost of
an action to decrease and increase.
• It also refers as the actions which are causes the variable costs to increase and
decrease for the associated British foods.
• The activity cost driver is the activity that causing the commitment of a cost as
well as causes the variable expenses to be obtained.

Activity Based Costing of Associated British
foods organisation – Cost Objects
• The cost objects are used in the activity based costing as the central point of value
accumulations.
• It is the financial term which is used in the cost accounting for indicate that which
costs are assigned.
• It is the part for which a cost is complied such as product, product line, project,
customers, distribution channels, services and activity.
• The cost objects are used by the Associated British food for bring off the costs
throughout a company.