Detailed ABC Costing Model Analysis: Vicinity Centres Report

This report provides a comprehensive analysis of the Activity Based Costing (ABC) model applied to Vicinity Centres Ordinary/Units FP Stapled Securities (VCX). It begins with an executive summary and introduction to the ABC model, highlighting its features and advantages over traditional costing methods. The report includes a case study of VCX, examining its business strategies, mission, and objectives, particularly in relation to investing and funding activities for malls and shops. It details how the ABC model can benefit VCX by improving cost allocation and financial reporting accuracy. The report recommends the implementation of the ABC model within VCX, outlining the steps necessary for successful adoption, including identifying cost drivers and educating stakeholders. The conclusion summarizes the key findings and emphasizes the importance of the ABC model for enhancing financial management and decision-making within the company. References support the information provided throughout the report, focusing on the benefits of the ABC model.

Vicinity Centres Ordinary/Units FP Stapled Securitie
ABC Costing Model
Costing Model

Executive summary
With the changes in economic conditions, each and every organization needs to take proper
costing model to bifurcate the costing of the business in the different work process. The ABC
costing model is one of the best models which absorb the cost of the busienss in the different
process on the basis of the cost drivers. The cost drivers are determined on the basis of
associated cost and influencing factors on the incurred loss. In this report, Vicinity Centres
Ordinary/Units FP Stapled Securities (VCX) has been taken into consideration to prepare this
report.

Table of Contents
Executive summary...............................................................................................................................2
Introduction...........................................................................................................................................2
Activity Based Costing: A managerial accounting tool:........................................................................3
Explanation:.......................................................................................................................................3
Features:............................................................................................................................................3
Alignment of Activity Based Costing Model: Case study of Vicinity Centres Ordinary/Units FP
Stapled Securities (VCX)..................................................................................................................4
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) BUSINESS STRATEGIES.................4
BENEFITS THAT ACTIVITY BASED COSTING MODEL CAN ADORN TESOLUTE
INVESTING AND FUNDING ACTIVITIES TO PROMOTE MALLS AND SHOPS WITH:............5
RECOMMANDATIONS: IMPLEMENTATIONS OF ABC MODEL IN Vicinity Centres
Ordinary/Units FP Stapled Securities (VCX)........................................................................................6
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

Introduction
ABC model is used by most of the companies for the purpose of recording the cost incurred
in its business. In the present complex business conditions and economic structure, it is to be
observed that it is required to have an understanding of the financial performance of all
departments and segments of the business for the better and effective governance. A number
of managerial tools for the same purpose are used by companies in present market conditions.
One of those important tools is Activity Based Costing Model. This report describes a case
study of a main investing and funding activities for the malls and shops, named as Vicinity
Centres Ordinary/Units FP Stapled Securities (VCX), to provide knowledge in a better way
about the implication of this model. The initial part of the report describes the meaning and
characteristics of this model of cost allocation. Further, the report includes the origins of
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) along with its mission,
objectives and key strategies to manage the business. The analysis of the company is helpful
in discussing the Activity Based Costing Model in implicating the strategies of the company.
On the bases of understanding of report, recommendation are provides for the efficient
management and application of this model. At the end of the report, a conclusion has been
drawn to provide the overall view of the report (Vicinity Centres Ordinary/Units FP Stapled
Securities (VCX), 2017).
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) is a leading real estate
investment trust specialising in owning and managing Australian shopping centers. The
company is carrying an experience in investing in trust specialised in owning and managing
Australian Shopping center at large. Activity Based Costing Model depends upon the
allocation of indirect cost that have incurred in the course of business. The cost is incurred on
the basis of level of functions and activities performed by each of the department and
segment. These activities are measured on the basis of consumption of resources and inputs.
It is dissimilar to the conventional and old methods allocation cost to departments. The model
helps in reduction of inappropriate allocation of cost and thus it becomes easier to find out the
actual results of the activities (Vicinity Centres Ordinary/Units FP Stapled Securities (VCX),
2017).

Activity Based Costing: A managerial accounting tool:
Explanation:
Unlike the old and traditional models of cost allocation, Activity based costing model
emphasis more on the material and element of an expense. According to the traditional
methods of cost allocation, cost should be allocated on the basis of labour hours or machine
hours. But as provided in ABC model overheads must be considered to the segments and
departments in the process of cost allocation. This model is mostly useful for the
manufacturing sector businesses because of some main reasons including the cost of
overheads usually is high as compared to earlier times, only machine and labour hours are not
the appropriate base for allocating cost and different types of products includes different
amount of investment of labour hour, machine hour and overheads (Hoozée, and Hansen,.
2017). The use of ABC model and costing will be used for the better allocation and absorption
of the cost in Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) (Vicinity Centres
Ordinary/Units FP Stapled Securities (VCX), 2017).
Features:
All type of costs have two aspects, one is fixed and another is variable. Fixed cost indicates
the cost which does not depends upon the level of activity and function undertaken. Fixed
cost is always incurred irrespective of the amount of production. On the other hand, variable
cost includes the cost which depends upon the level of activity and production. At the time of
application of ABC model, all typed of indirect overheads are distinguished as fixed and
variable costs. This ABC model will not only increase the overall outcomes and reduce the
overall costing in effective manner.
After this, the nature of every cost is differentiated and understood. This step helps in
identifying the areas of cost occurrence and then costs are allocated to various departments on
the basis of identified cost drivers. Cost drivers can be understood as the basis for the division
of costs. It can a maintenance request, machine setups, number of inspections and power
consumed (Kazemi, and Zadeh, 2015).
These all are the main features that makes a difference between ABC model and other
managerial tools. This model facilitates the management to check the performance level of
different segments and departments and to make proper decision accordingly (Mahal, and
Hossain, 2015).

Alignment of Activity Based Costing Model: Case study of Vicinity Centres
Ordinary/Units FP Stapled Securities (VCX)
Mission and Objectives:
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) is a company working in
investment industry for operating malls and centers form 25 years has an excellent client
experience by performing well in providing funds and investment for different business units
around the globe. The company aims at providing value to mines that can operate in long run
and are helpful in extensive promotion of the malls and shops through investing and funding
activities (Namazi, 2016).
The objectives of Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) are identified
in computable terms. The main objectives of the company is to prepare the list of qualified
candidates for assigning permanent employee position, which can be differentiated on the
basis of age, ethnicity and sex. The objectives of the company also includes placing of
consideration on the basis of review of succession plan. The main responsibility of evaluating
and formulating of these objectives lies in hands of remuneration committee (Öker, and
Adıgüzel,. 2016).
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) BUSINESS
STRATEGIES
As a leading company in this industry, the management of the company is well aware about
the need to maintain effective and sound strategies to facilities continuous success of the
business and to raise the market value of its shares. The strategies of Vicinity Centres
Ordinary/Units FP Stapled Securities (VCX) are framed with the help of a Communication
strategy to provide effective communication to employees, stakeholders, suppliers, customers
and to earn their trust as well. It facilitates the availability of three main kinds of disclosures:
continuous, periodic and specific (Papadaki, and Popesko, (2016).
In order to avoid the conflicts related to interest, proper disclosure of the interest policy is
assured by the company. The company is also maintaining anti-bribe and anti-corruption
policies. Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) has adopted
disclosure policy to frame the route of good governance. Inclusion and diversity policy are
the main steps to ensure the gender inequality. The policies aims at rising in the number of
women employees along with the negligence of caste, race and ethnicity.

Although the main motive of all strategies is related to earning maximum profit, Vicinity
Centres Ordinary/Units FP Stapled Securities (VCX) also focuses to keep pace with the
society by taking care properly its business activities. The company also ensures complete
environmental friendly operations in its process of investing and funding activities to promote
malls and shops (Vicinity Centres Ordinary/Units FP Stapled Securities (VCX), 2017).
To ensure clear treatment and to avoid issues of superiority, a proper code of conduct is being
maintained by the company which helps and guides the employees, directors and also
contactors to perform their day to day roles and activities with complete humanity with each
other. Vicinity Centres Ordinary/Units FP Stapled Securities (VCX) is a listed company and
always try to evade inside trading and allows trading according to regulations and rules of
Australian Corporation Act. The information related to the above mentioned policies is
available easily on the website of Vicinity Centres Ordinary/Units FP Stapled Securities
(VCX). The company is having board of directors who are expert the formulation of
corporate and business strategy and delivering their services in excellent manner.
BENEFITS THAT ACTIVITY BASED COSTING MODEL CAN ADORN
TESOLUTE INVESTING AND FUNDING ACTIVITIES TO PROMOTE MALLS
AND SHOPS WITH:
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX)has to bear various direct and
indirect costs in the exploration and promotion of malls and shops through the investing and
funding activities. The company does not deal in a single product and this reason that is has
to face problem in the allocation of overheads to different segments in proper manner.
While considering the annual report of Vicinity Centres Ordinary/Units FP Stapled Securities
(VCX), Ravenswood, Bibiani, Corporate, Syama and Treasury can be included as reportable
segments of the company. It is clear that corporate and treasury are termed as unallocated
segments for the company. The exact process of allocating the overheads is not mentioned.
Biyani is not processing any activity and thus it is the only one bearing fixed cost. On the
other hand, rest of the segments are highly working and active. But still, allocation of costs
does not based on activity even after the production indicates high changes in various
segments (Vicinity Centres Ordinary/Units FP Stapled Securities (VCX), 2017).
As the company has a number of reporting segments, it should adopt The Activity Based
Costing Model for allocating costs in respective segments. Every segment or production has a

different location with different level of activities which leads to different overheads and
costs. Allocation of cost on the basis of machine hours and labour hours is not sufficient
because they are not directly linked with the type of overheads incurred. To find out the true
position and to know the efficiency and effectiveness of different segments, it is to be
recommended that company should adopt the practice of ABC tool for managing its
reporting.
This will result in enhancing the quality and reliability of financial reports issued by the
company to its shareholders. By this report, shareholders would find it easy to measure the
growth and performance of the company in real senses. It also defines that vagueness shall
not persist (Vicinity Centres Ordinary/Units FP Stapled Securities (VCX), 2016).
RECOMMANDATIONS: IMPLEMENTATIONS OF ABC MODEL IN Vicinity
Centres Ordinary/Units FP Stapled Securities (VCX)
The company is requited to study the features of Activity Based Costing Model to know the
essentials for adopting such model. It is required to identify the nature of various overheads
so as to made distinction in fixed and variable costs. After distinction, behaviour of cost
patterns should be scrutinised to find out the actual drivers directly linked with the overheads.
The cost drivers can be in the form of volume of machines, number of production orders,
number or maintenance requests etc. After identification of cost drivers, the company should
carry forward with the allocation of actual cost (Shander Ozawa,., and Hofmann, 2016).
As it is not a quick process, the company should arrange meetings with employees as well as
with its board of directors to make them understand about the new system of cost allocation.
They should also be told about the need of such changes. Their suggestions should be
considered and appreciated. As it is a well-known fact that any type of change can be proved
successful only if the team is ready to adopt ad work on such change. Otherwise, there old be
more chances of failure as well (Tsai, et al. 2015).

Conclusion
After analysing all the details and case study of the Vicinity Centres Ordinary/Units
FP Stapled Securities (VCX) regarding use of the ABC costing model, it could be inferred
that if this company uses the ABC costing model then it will increase the overall efficiency of
the business. IT is analyzed that ABC costing model will assist Vicinity Centres
Ordinary/Units FP Stapled Securities (VCX) to make proper bifurcation in the business
process which will increase the overall outcomes. It is observed that Cost drivers can be
understood as the basis for the division of costs. It can a maintenance request, machine
setups, number of inspections and power consumed (Kazemi, and Zadeh, 2015).

References
Hoozée, S., and Hansen, S. 2017. A comparison of activity-based costing and time-driven activity-
based costing. Journal of Management Accounting Research.
Kazemi, Z., and Zadeh, H. A. 2015. Activity based Costing: A Practical Model for Cost Price
Calculation in Hospitals. Indian Journal of Science and Technology, 8(27).
Mahal, I., and Hossain, A. 2015. Activity-Based Costing (ABC)–An Effective Tool for Better
Management. Research Journal of Finance and Accounting, 6(4), 66-74.
Namazi, M. 2016. Time-driven activity-based costing: Theory, applications and limitations. Iranian
Journal of Management Studies, 9(3), 457.
Öker, F., and Adıgüzel, H. 2016., Time‐driven activity‐based costing: An implementation in a
manufacturing company. Journal of Corporate Accounting and Finance, 27(3), 39-56.
Papadaki, Š., and Popesko, B. (2016). Cost analysis of selected patient categories within a
dermatology department using an ABC approach. Global journal of health science, 8(6), 234.
Shander, A., Ozawa, S., and Hofmann, A. (2016). Activity‐based costs of plasma transfusions in
medical and surgical inpatients at a US hospital. Vox sanguinis, 111(1), 55-61.
Tsai, W. H., Tsaur, T. S., Chou, Y. W., Liu, J. Y., Hsu, J. L., and Hsieh, C. L. (2015). Integrating the
activity-based costing system and life-cycle assessment into green decision-making. International
Journal of Production Research, 53(2), 451-465
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX), 2016). Annual report. Available
at http://www.vicinity.com.au/investor-centre., , Accessed on 22nd May, 2015
Vicinity Centres Ordinary/Units FP Stapled Securities (VCX), 2017). Annual report. Available
at http://www.vicinity.com.au/investor-centre., , Accessed on 29th May., 2015