Product costing of distribution relays using ABC concept

Abstract

This project reports deals with Product Costing of Distribution Range of Relays and how the ABC Concept can be applied. Also the various steps to be taken are identified . To start with, as a small step towards ABC implementation, the QFC's of various relays for the year 1997 has been calculated based on Activity Cost Centre Concept. Also the literature on the xABC was studied and salient points are as under :The "Accelerated Approach to Activity Based Costing" ( xABC ) collects data to : Focus on the Vital few areas of improvement opportunities» Identify TRUE expenses and unit costs by product line and distributor. Allows a process orientation of organisational activities. Understand the associated cost drivers. For each cost center, personnel salary and benefits and overhead costs are allocated toeach process worker's worksheet. Expenses are then spread to product lines. Additionally, cost driver and other key metrics are collected during the interview on a process worker level. Data is summarised at Business Unit. Process and Cost Center perspective. Based on the ABC results, the top resource intensive processes are Production and Sales/Marketing representing 58% of the Business Unit's expenses.