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Activity Based Management

Activity Based Management. Class Announcements. Midterm in-class Tuesday October 23 rd Extended Office hours on Monday October 22 nd 10:00am to 4:00pm Assignment #6 due October 30, 2012 Final Exam is 9:00am Saturday December 15 th. Class Objectives. Extending ABC to ABM

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Activity Based Management

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  1. Activity Based Management

  2. Class Announcements • Midterm in-class Tuesday October 23rd • Extended Office hours on Monday October 22nd • 10:00am to 4:00pm • Assignment #6 due October 30, 2012 • Final Exam is 9:00am Saturday December 15th

  3. Class Objectives • Extending ABC to ABM • Identifying and eliminating non value added activities • Understandings the context in which ABM is successful

  4. Activity Based Management • Activity based costing focuses on: • 1) understanding the way resources are used in current processes • 2) accurately measuring product costs using those processes. • Activity based management is used by management to evaluate the costs and values of process activities to identify opportunities for improved efficiency.

  5. ABM Implementation: Success • 1. Scope of ABC/ABM Project. • Pilot project • 2. Resources Necessary • Management commitment • Technology • Personnel and time • 3. Resistance to Change • Preventing resistance • Effects of culture • 4. Information Gathering • 5. Responsibility

  6. Shortcomings of Activity-Based Management • It pays primary attention to the cost (in dollar values) of an organization’s personal and physical resources. • Activity analyses often assume that those costs can be treated as if they were all variable. • It assumes uniformity among the human and physical resources involved in performing activities. • It is still primarily concerned not with operational effectiveness, but with measuring the cost of products (as is financial accounting).

  7. Egg Production: Industry • Canada has approximately 1,100 registered egg farms. • The average egg farm has 10,000 to 20,000 hens, although Canadian egg farms can range from a few hundred to more than 400,000 hens. • In Canada, a total of 25 million hens (including unregistered hens) produce about 500 million dozen eggs per year – that's 6 billion eggs! • The egg industry contributes about $500 million to the Canadian economy.

  8. Nova Scotia Egg Producers • The Nova Scotia Egg Producers (NSEP) is incorporated under the Natural Products Act for Nova Scotia. The act provides the NSEP the authority to carry out its mandate of effective promotion, control and regulation of eggs and pullets in Nova Scotia. • The NSEP is governed by an eight person Board of Directors consisting of seven members who represent egg producers in geographic zones throughout the province and one who represents the pullet sector. • NSEP uses a supply management system to provide a stable supply of eggs to consumers at fair prices and a fair return to producers.

  9. Midterm • Worth – 30% • When –Tuesday (23rd) in-class • Coverage – • Management Accounting (Chapter 1) • Costs (Chapter 2) • CVP (Chapter 3) • Job Costing (Chapter 4) • ABC and ABM (Chapter 5) • Format: • short answer with multiple parts; • choice of 3 out of 4; • no journal entries; no ethics; no decision making model

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