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E X E C U T I V E
P R O G R A M
C E N T E R
Activity Based Costing
A Step-by-Step, Proven Path for Rapid Implementation
T E C H N O L O G Y
I N D U S T R I A L
R E L A T I O N S
Software models Implementation worksheets Time Phased PERT Implementation Plan Activity Based Cost Management: Making it Work
I N S T I T U T E
Alan G. Dunn
November 12-13, 2001 March 11-12, 2002
C A L I F O R N I A
w w w . i r c . c a l t e c h . e d u
ABM relies on the Activity Based Costing system to specify where non-value-added activities exist and to value the monetary benefits associated with their “Looking at value-added versus nonvalue-added brings a new focus on the implementation plan and the activity center analysis.” Jeffrey Haines Associate Director SmithKline Beecham Pharmaceutical elimination. Incorporated Program Background and Purpose To compete successfully. This means replacing old institutions of cost accounting and inventory valuation. the bulk of the program is devoted to demonstrating how ABC can be quickly and economically implemented. intensive executive program provides all you need to know to begin your ABC implementation project.Activity Based Costing Comments from Past Participants “Understanding the steps and definitions of activity based costing will enable me to implement this strategy at Thompson. It does not represent just a new set of overhead allocation rules or tech- “The outline of what is needed to implement activity based costing and the broader scope of what we think of as non-value-added costs are very important concepts that I can apply in my job. . This extended two-day.” Annette DiGorga Controller Thompson Industries. While some theory is presented.” Ronald W. companies must change the way they report and manage costs. Sucy Manager. Activity Based Costing (ABC) is a managerial accounting system which determines the cost of activities without distortion and provides management with relevant and timely information. Costing and Budgets The Jackson Laboratory niques to value inventory. The program is well organized and thorough. Participants should prepare themselves for a unique learning experience designed to achieve quick and sustainable results. Participants learn specific actions needed to effectively implement and use ABC. Activity Based Management (ABM) is a natural extension of ABC. ABC represents a way to look at operating costs and provides methods to dissect the underlying activities. It allows leaders to examine non-value-added activities and make rational decisions to eliminate them. which cause costs to exist.
competitive costing. i r c . ‘non-value-adding’ (NVA) and ‘non-value-addingrequired’ (NVAR) s How to determine each activity center’s ‘customers’ s How to determine and document the level of effort required to support each internal ‘customer’ s How to use the ‘resource schedule’ and ‘activity analysis’ to immediately begin reducing costs s How to rank and select waste elimination projects using the 22 42 matrix s How to mobilize employees to eliminate non-value-added activities themselves managerial costing s New P&L formats s How to use Activity Based Costing to support Activity Based Management s The importance of data integrity Principles of ABC/ABM s Important principles of ABC s How not to take a good idea too far s ABM: a systematic approach to eliminate waste How to Implement ABC – A Nine Phase Plan s The best way to approach an ABC/ABM implementation s The importance of mobilizing employees early in the process Phase 1 .Describing the activities performed in each activity center s How to determine each activity center’s resources and create a ‘resource schedule’ s How to identify and document significant activities performed in each activity center s How to develop activity center specific definitions of ‘valueadding’ (VA).Developing a data integrity process s Impact of poor data in any cost model s How to develop a formal data integrity process s Using Missing Data reports s Using Cyclic Data Certificate reports s Executive data integrity monitoring s Leadership benefits from solving the data integrity problem Phase 4 . work center. FASB and GAAP conflicts Phase 2 . organizational. and department definitions with new activity center definitions s How to create the necessary general ledger accounts and interfaces Phase 5 . and Phase 3 .Organizing to implement ABC s Developing a reasonable implementation plan s Determining the necessary resources for implementing ABC/ABM s Organizing a cross-functional implementation team s Analyzing why some ABC/ABM implementations fail and how your company can succeed w w w .Program Agenda Executive Overview of Activity Based Costing (ABC) and Activity Based Management (ABM) s How the need was created for better cost accounting s How to compare traditional and activity based cost reports s Macro level Activity Based Costing s Micro level Activity Based Costing s Reasons for cost accounting and ABC s Elements of financial costing.Preparing the company for ABC/ABM s Defining ABC/ABM mission s Determining the technical.Determining the real sources of product cost s How to define activity centers s How to identify and differentiate Production Activity Centers (PACs) and Support Activity Centers (SACs) s How to segment SACs into Factory Support Activity Centers (FSACs) and Business Support Activity Centers (BSACs) s How to replace cost center. statutory. cultural and external impediments to implementing ABC s Determining training requirements s Developing innovative cost reports including contribution focused product line P&Ls s Identifying accounting rules s Identifying regulatory. profit center.
which provides an opportunity to share information and ideas with the instructor and other participants.. please call 626 395-4042 or email cstprg@caltech.Determining the relationships of cost sources s How to describe the relationships between production and Customized Programs All programs offered by the Caltech Industrial Relations Center can be customized to meet the specific needs of your organization and offered at significant cost savings at your facility.Phase 6 . and save travel time and costs for participants... turning ABC into a powerful decision tool s Creating a simulation tool for predicting cost changes which result from multiple and concurrent cost parameter changes Internet Access www. which demonstrates how product costs can change as multiple operating parameters are changed elsewhere in the organization. Beyond ABC. burden and overhead into an activity based product line P&L s How to use ABC within the confines of an existing database s How to flow cost data into segmented P&Ls s How to develop a Product Cost Portfolio Report s How to replace financial reporting with causal metrics For complete details regarding customized programs.Developing an ‘Activity Center Performance and Cost Diagnostic’ (ACP&CD) tool to describe the total costs of each activity center s How to develop and use cost diagnostic tools s How to define the sequence of activity centers to analyze s How to link diagnostic tools and invent new allocations rules s How support costs can be automatically allocated via an activity model s How to test diagnostic values by performing a ‘slice’ analysis Phase 8 .edu . Among the wide selection of programs which can be customized to your company’s requirements. are the following: s Activity Based Costing s Manufacturing Cost Strategies s Measuring Business Performance s Integrated Strategic Planning s Successful Project Management support activity centers s How to allocate individual cost partitions (instead of total activity center costs) s How to develop a cost flow map Phase 7 . participants operate a simulation model.Using Activity Based Costing to make decisions s How to ‘roll up’ material. Customized programs address important company issues in a confidential environment. build a team with a common language. labor. Special Features Participants are invited to attend a dinner the first evening of the program.irc. e d u .Calculating other allocation values s How to develop a Material Acquisition Burden (MAB) diagnostic tool s How to develop a Product Line Support Overhead (PLSO) diagnostic tool s How to develop an Unmodeled Overhead (UO) diagnostic tool Phase 9 . c a l t e c h .. Participants receive: Tools necessary to successfully and immediately implement ABC in your organization s Activity-Based Cost Management: Making it Work by Gary Cokins s Time Phased PERT Implementation Plan s ABC software models s ABC implementation worksheets During the program.caltech. Extending ABC into Predictive Cost Modeling s Defining Predictive Cost Modeling (PCM) s Understanding the comprehensive cost management data- base s Using ABC to predict product line costs s Using ABC to understand all sides of any business decision s Extending the Product Cost Portfolio Report into PCM.edu.
Hyland Labs. w w w . General Instrument. American Cyanamid. Boeing. Fullerton. Mr. Baxter. the Society of Manufacturing Engineers (SME). and Justice. Warehouse Cost Digest.Program Leader Alan Dunn is president of GDI. and Industrial Engineering Management. Mr. value engineering. Loral. Pacific Telesis. He specializes in manufacturing management. and United Technologies. Chiron-Cetus. Dunn was a partner at Coopers & Lybrand and was a vice president at Gemini Consulting. information systems management. Dunn is an international educator. Dunn’s clients include: Allied Signal. speaker. and author in manufacturing systems. i r c . the United States Departments of Defense. Transformation Magazine. General Motors. cost management. Amgen. Mr. AT&T. Tellabs. He has addressed the American Production and Inventory Control Society (APICS). Toshiba. and business finance. cost management. and the National Association of Accountants (NAA). e d u . Material Handling Engineering. and business finance. His articles have appeared in The Los Angeles Times. business transformation. Production and Inventory Review. Dunn holds a bachelor’s degree in business management from California State University. Energy. Hughes Aircraft. a consulting and training company. Previously. Managing Automation. c a l t e c h . Mr. Intel. Automation. SmithKline Beecham. Journal of Manufacturing Systems. and chairman of GDI’s business investment firm. Johnson & Johnson. the Council of Logistics Management (CLM).
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