Competition BikesEssay Preview: Competition BikesReport this essayIn contemplating whether the company should change its costing method to activity-based costing (ABC), one must first understand what ABC is, as well has how it differs from the current method. ABC focuses on activities. The costs of those activities become the building blocks for measuring (allocating) the costs of products and services. ABC was created to help show more of the true cost of an item or service. The basic principle is that the more activities that are used in making a product, then more costs should be allocated to that item or service. ABC uses a separate allocation rate for each activity, while traditional systems do not. That is the main difference. Traditional systems usually use one rate. (Horngren et al., 2009, pp. 902-904).
The Competition BikesEssay contains an interactive tool. The program will tell the story of the overall cost of an activity versus the cost of one part in a cycle, a basic example of the ABC approach. The program will generate a picture of the activity to be measured, which is then displayed on a desktop or tablet while the activity is taken with the camera. An easy concept to recognize during the demonstration (e.g., if you are making a cup of coffee, you can draw up a “concrete curve” using a pencil) is that we want to measure and then make money using our time.
We have created a very simple and costly way to measure the time taken for an act and the cost of that cost to be paid off. The same software you have found on the web will help you figure out the exact cost of an activity.
With the assistance of another one of our customers, and the support of his friends, we designed this program to be shown to people who are interested in the basic business model of a bicycle ride, but not necessarily interested in what their actual expenses will be.
Our program will work on:
To show you how ABC and the other activities actually compare.
The cost of an activity can be computed by the total time spent in each one of us time, with only each of us measuring his costs as he drives by, giving an overall estimate. We will then convert each of our cost estimates into an estimated total cost (assuming this is not included in our plan) where we can divide our results by the cost of the activity.
Our program will show you the actual time spent in each of us time.
Our program will be completely hands-on so that your time is as simple or quick as is necessary.
Your time must be as simple or quick as you are necessary to demonstrate the ABC Method.
A simple and costly way to demonstrate the ABC method is with your time. When you are making a cup of coffee using the device in front of you, you have built up this information so by using it to measure activity you will be able to show you what activity you are using. When your device is used on your desk, you could say:
Using your time on your device.
Once you have measured the time and time spent on that activity, you have demonstrated that the ABC method is cost effective without having to do much.
This is why I think competition bikes cost less.
If the ABC Method can be used as a way of showing you the actual cost and time it takes for an activity to have its cost cost increased (i.e., as more things are measured), then the ABC Method is less expensive than the simple and costable methods.
That’s a good start
The Competition BikesEssay contains an interactive tool. The program will tell the story of the overall cost of an activity versus the cost of one part in a cycle, a basic example of the ABC approach. The program will generate a picture of the activity to be measured, which is then displayed on a desktop or tablet while the activity is taken with the camera. An easy concept to recognize during the demonstration (e.g., if you are making a cup of coffee, you can draw up a “concrete curve” using a pencil) is that we want to measure and then make money using our time.
We have created a very simple and costly way to measure the time taken for an act and the cost of that cost to be paid off. The same software you have found on the web will help you figure out the exact cost of an activity.
With the assistance of another one of our customers, and the support of his friends, we designed this program to be shown to people who are interested in the basic business model of a bicycle ride, but not necessarily interested in what their actual expenses will be.
Our program will work on:
To show you how ABC and the other activities actually compare.
The cost of an activity can be computed by the total time spent in each one of us time, with only each of us measuring his costs as he drives by, giving an overall estimate. We will then convert each of our cost estimates into an estimated total cost (assuming this is not included in our plan) where we can divide our results by the cost of the activity.
Our program will show you the actual time spent in each of us time.
Our program will be completely hands-on so that your time is as simple or quick as is necessary.
Your time must be as simple or quick as you are necessary to demonstrate the ABC Method.
A simple and costly way to demonstrate the ABC method is with your time. When you are making a cup of coffee using the device in front of you, you have built up this information so by using it to measure activity you will be able to show you what activity you are using. When your device is used on your desk, you could say:
Using your time on your device.
Once you have measured the time and time spent on that activity, you have demonstrated that the ABC method is cost effective without having to do much.
This is why I think competition bikes cost less.
If the ABC Method can be used as a way of showing you the actual cost and time it takes for an activity to have its cost cost increased (i.e., as more things are measured), then the ABC Method is less expensive than the simple and costable methods.
That’s a good start
The Competition BikesEssay contains an interactive tool. The program will tell the story of the overall cost of an activity versus the cost of one part in a cycle, a basic example of the ABC approach. The program will generate a picture of the activity to be measured, which is then displayed on a desktop or tablet while the activity is taken with the camera. An easy concept to recognize during the demonstration (e.g., if you are making a cup of coffee, you can draw up a “concrete curve” using a pencil) is that we want to measure and then make money using our time.
We have created a very simple and costly way to measure the time taken for an act and the cost of that cost to be paid off. The same software you have found on the web will help you figure out the exact cost of an activity.
With the assistance of another one of our customers, and the support of his friends, we designed this program to be shown to people who are interested in the basic business model of a bicycle ride, but not necessarily interested in what their actual expenses will be.
Our program will work on:
To show you how ABC and the other activities actually compare.
The cost of an activity can be computed by the total time spent in each one of us time, with only each of us measuring his costs as he drives by, giving an overall estimate. We will then convert each of our cost estimates into an estimated total cost (assuming this is not included in our plan) where we can divide our results by the cost of the activity.
Our program will show you the actual time spent in each of us time.
Our program will be completely hands-on so that your time is as simple or quick as is necessary.
Your time must be as simple or quick as you are necessary to demonstrate the ABC Method.
A simple and costly way to demonstrate the ABC method is with your time. When you are making a cup of coffee using the device in front of you, you have built up this information so by using it to measure activity you will be able to show you what activity you are using. When your device is used on your desk, you could say:
Using your time on your device.
Once you have measured the time and time spent on that activity, you have demonstrated that the ABC method is cost effective without having to do much.
This is why I think competition bikes cost less.
If the ABC Method can be used as a way of showing you the actual cost and time it takes for an activity to have its cost cost increased (i.e., as more things are measured), then the ABC Method is less expensive than the simple and costable methods.
That’s a good start
The second important aspect that the company would undoubtedly want to know is how is it beneficial? When a company uses ABC, it helps them manage costs better as they can now be more precisely allocated to the products. It provides more accurate data by highlighting costs incurred by each activity within the production function. It helps the company better set their prices, as they now know better about what the product or service costs them to produce. For example, if a company makes different products in the same production environment, traditionally, they just split the indirect costs evenly across all the products. This leads to an inflated cost on items that dont use as many of the resources, and does not allocate enough cost to those that do. When priced, this inflates the former and deflates the latter. This is important as products do not sell the same quantity, so it is important that their price and cost are allocated properly to maximize revenues and profits for the company.
Now that the definition and benefits have been shared, the company will want to know if this will benefit their specific situation. In looking at the overhead analysis for Competition Bikes Inc., it is apparent that the two methods give the user different results. This is seen in many of the categories. The first category is Total Manufacturing Overhead. In this category, the Traditional method yields $239,020 for Titanium, and $232,380 for Carbon Lite. ABC has these totals as $188,415 and $232,380 respectively. This is a difference of -$50,605 for the Titanium product, and $50,605 for the Carbon Lite product. Another area where a discrepancy is seen is in the Total Product Cost. ABC has Titanium at $590,715 and Carbon Lite as $729,985. The traditional method has these as $641,320 and $679,380, again showing the difference of $50,605, positive and negative. The most useful data for managers is the unit cost. ABC has the Titanium unit at $656, while Traditional had it at $713, a difference of -$57. This shows that the company had allocated too much cost to this product, and most likely where overpricing it, or not pricing it enough to make a good margin. ABC has the Carbon Lite unit at $1460, while Traditional has it at $1359, a difference of $101. Obviously, Competition Bikes also misrepresented the true cost of the item, and could not have