...Activity Based Costing in the Public Sector By: Brandy Medina Public sector organizations at all levels and of all types are facing intense pressure to do more with less. Governments at all levels in almost all the countries in the world are feeling some kind of pressure. The pressure on spending comes from many sources, i.e. from politicians aiming to win taxpayers’ approval. There is pressure from the competition with other cities to attract homebuyers or with other counties, states or nations to attract businesses. In the United States, the cities don’t just compete against other cities – each city competes against its own suburbs, and the suburbs often have an advantage in attracting residents and businesses. They may offer lower taxes, better schools and less crime. As residents and businesses relocate, the cities and towns they departed from lose a little more of their tax base. Less money is available unless tax rates are raised. Additional pressure may come from declining demand, regardless of the reasons. An example is rural road maintenance. In these cases, economies of scale are less easily achieved, and the final costs become more expensive. In the United States, the federal government is shifting some responsibilities to state and local governments but providing only limited funding to fulfill those obligations. Regardless of where the pressure is coming from, the message is: better, faster, cheaper – hold the line on taxes, but don’t let service slip. Meeting...
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...Contents 1. The reasons for the cost analysis 1 2. The strengths and weaknesses of ABC 2 2.1 Strengths of ABC 2 2.2 Weaknesses of ABC 3 3. Comments of giving opportunity to municipal employees to reduce costs 4 4. Calculation of union’s bids 5 4.1 Unit Cost 5 4.2 Quantity 7 4.3 Total Bid 9 5. The problem and advice for management 10 The reasons for the cost analysis The Indianapolis government decides to privatize some of its public services. Although not all the government services are suitable for private sectors (such as police), for many services, competitive market powers can make them do things more efficiently and cost-saving than public sectors. Therefore privatizing government services is a good tool for the improvement of public service. A cost analysis is necessary before the privatizing process. Before the reformation, the government did not have a specific cost system based on different activities so nothing can be measured. For a particular government service, the managers cannot measure its cost. The lack of cost data can lead to serious problems. One is no plans. As the managers do not have historical data, they cannot make any development or maintenance plans. They just follow the same things they did last year and require a fixed amount of greater budget. As a consequence, they have been using the old plans which were from many years ago. If government has no clear plans for future development, it cannot privatize any services...
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...subjective or calculated range of indirect expenses to direct costs. Activity Based Costing (ABC) offers an alternative approach. Much of the textbook work on ABC refers to examples from large-scale manufacturing and yet in the UK total public spending is expected to be some £759 billion in fiscal year ending 2016 of which 12% (£89 billion) will be spent within the education sector (www.ukpublicspending.co.uk). REQUIRED: Discuss how a UK university might use ABC to (a) produce costs for services, and to (b) evaluate the internal efficiency and profitability per service line. Both benefits and drawbacks must be considered. Your answer must be supported by extensive reference to relevant literature, logical argument, and may, but not necessarily, include worked examples to illustrate your arguments attached as appendices to your work. All reference to literature must be referenced in Harvard Style. The validity and reliability of all literature must be considered except where its source is a peer-reviewed journal. The literature you refer to does not need to be about UK public sector organisations: you may find journal articles from other countries, or articles about small or large private enterprises. Such articles might help you to discuss applying the principles of ABC from one type of organisation to another, from one country to another, or to discuss differences between private and public sector organisations. FEEDBACK DATE: 15 JANUARY 2016 The word count is 2,000 words +/- 10%...
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...(12F360) SCM Introduction Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing. CIMA (Chartered Institute of Management Accountants) defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. Aims of model With ABC, a company can soundly estimate the cost elements of entire products ACTIVITIES and services. That may help inform a company's decision to either: * Identify and eliminate those products and services that are unprofitable and lower the prices of those that are overpriced (product and service portfolio aim) * Or identify and eliminate production or service processes that are ineffective and allocate processing concepts that lead to the very same product at a better yield (process re-engineering aim). In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services provided to its customers. ABC is generally used as a tool for understanding product and...
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...of the machine is not being recognized when the same broad 'on-cost' percentage is added to all products. Consequently, when multiple products share common costs, there is a danger of one product subsidizing another. ABC is based on George Staubus' Activity Costing and Input-Output Accounting.[4] The concepts of ABC were developed in the manufacturing sector of the United States during the 1970s and 1980s. During this time, the Consortium for Advanced Management-International, now known simply as CAM-I, provided a formative role for studying and formalizing the principles that have become more formally known as Activity-Based Costing.[5] Robin Cooper and Robert S. Kaplan, proponents of the Balanced Scorecard, brought notice to these concepts in a number of articles published in Harvard Business Review beginning in 1988. Cooper and Kaplan described ABC as an approach to solve the problems of traditional cost management systems. These traditional costing systems are often unable to determine accurately the actual costs of production and of the costs of related services. Consequently managers were making decisions based on inaccurate data especially where there are multiple products. Instead of using broad arbitrary percentages to allocate costs, ABC seeks to identify cause and effect relationships to...
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...the Australian Government privatise Medibank Private? Since the 1990s the Commonwealth and State governments of Australia has privatised a sizeable portion of the public sector (Reserve Bank of Australia 1997). The prospect of privatising Medibank has been a controversial matter since its proposal by the Howard government in 2006, although the former government failed to do so, the Abott government announced on March 26th, 2014 that the company will be sold off through an initial public offering (IPO) in the 2014-15 financial year (Mcllroy 2014). This essay will argue that Medibank Private should be privatised and sold publicly through an IPO for short and long term economic and social benefits. In order to determine the validity of this argument this essay will analyse articles and other academic evidences to first look into Australia’s history of privatisation and a brief history of Medibank Private. The essay will then analyse the conflict of interest the current system generates. Further, it will explore the advantage of privatising Medibank Private, including increasing competitiveness in the market and money generated for other social and economic projects. The Reserve Bank of Australia (1997:7) defines privatisation as the full or partial transfer of ownership of public assets to the private sector (Reserve Bank of Australia 1997). Privatisation gradually increased across the world in the 1980’s originating in Chile, the UK and New Zealand which was a ‘radical...
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...179 International Journal of Collaborative Research on Internal Medicine & Public Health Specifics of the Activity-Based Applications in Hospital Management Boris Popesko * Tomas Bata University in Zlin, Czech Republic * Corresponding Author; Email: popesko@fame.utb.cz Abstract Paper analyses the specifics of the application of Activity-Based Costing method in hospital management. Primary objective of the paper is to outline the methodology of the ABC application in hospitals. First part of the paper analyzes the ways of ABC implementation in published foreign studies. Second part describes the individual steps in ABC application and discusses the differences in the application procedures between the manufacturing and hospital organization. Key words: Healthcare Management, Cost Management, Activity-based costing, Introduction In the last decade, many non-profit and hospital organizations started to face difficulties and challenges in balancing limited resources and costs to provide their demand for services. Due to the introduction of modern medical techniques and medicines and consequent increase of consumed costs, many hospitals are under pressure to adopt more advanced cost management techniques usually utilized only in profit organization sector. Hospital managers frequently seek the advanced techniques, for better understanding of relations between the cost and provided services. One of the key factors of effective company management is ability of accurate...
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...University of Malaysia Terengganu, Kuala Terengganu, Malaysia and School of Accounting, La Trobe University, Melbourne, Australia, and Management accounting innovations 505 Zahirul Hoque School of Accounting, La Trobe University, Melbourne, Australia Abstract Purpose – The purpose of paper is to present a review of the literature on management accounting innovations (MAIs). Specifically, it explores recent developments in research on MAIs and offers suggestions for future research. The review differs from existing reviews by its specific focus on MAIs and the recent time period covered. In this paper, MAIs refer to the adoption of “newer” or modern forms of management accounting systems such as activity-based costing (ABC), activity-based management, time-driven ABC, target costing, and balanced scorecards. Design/methodology/approach – The paper presents a review of findings from journal articles published in 22 notable accounting journals. Findings – The review finds that research on MAIs has intensified during the period 2000-2008, with the main focus on exploring the extent to which a host of organizational and environmental factors influence the implementation and use of MAIs in organizations. In addition, research on MAIs indicates the dominant use of sociological theories and increasing use of empirical/field studies. Research limitations/implications – A literature review using a given set of accounting journals and search words used to identify relevant articles may overlook...
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......................................................................... 10 5 RECOMMENDATIONS .................................................................................... 11 6 REFERENCES ................................................................................................. 12 ZEIT8303 – PROJECT MANAGEMENT BODY OF KNOWLEDGE 2 NATHAN WORLING -‐ Z5057106 1 EXECUTIVE SUMMARY In 1996 the Victorian Government announced an open design competition to create an eye catching, multipurpose, iconic attraction within the Melbourne CBD that encompassed a range of recreational, cultural, commercial, multimedia and entertainment facilities (Report on Public Sector Agencies 2003). By the time the opening occurred on the 26th of October 2002 the project was $350 million...
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...System in the Service Sector: A Strategic Approach for Enhancing Managerial Decision Making and Competitiveness Ashford C. Chea School of Business, Kentucky Wesleyan College 4721 Covert Avenue, Evansville, IN 47714, USA Tel: 1-812-471-9341 E-mail: achea@ix.netcom.com Received: June 21, 2011 doi:10.5539/ijbm.v6n11p3 Accepted: July 4, 2011 Published: November 1, 2011 URL: http://dx.doi.org/10.5539/ijbm.v6n11p3 Abstract The author begins the article by outlining a brief historical evolution of activity-based costing (ABC) in the USA preceded by an operating definition of terminologies. Next, he presents the literature review and the methodology employed during the study. He reviews the application of ABC in the service sector, followed by an analysis of the unique attribute of the service sector. Moreover, the researcher briefly profiles several service-oriented firms that have successfully adopted and implemented ABC, and presents his findings from the study. He then addresses the limitations of ABC in the service sectors and offers strategies for dealing with these drawbacks. Finally, the researcher outlines the managerial implications of implementing ABC in the service sector. Keywords: Activity-based costing, Service sector, Managerial decision making, Cost measurement 1. Introduction The concept of activity-based costing (ABC) was introduced in the US, initially in the manufacturing sector during 1970s and 1980s. Robert Cooper and Robert Kaplan brought the ABC concept to light...
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...ABC PR AGENCY [Document subtitle] | Public Service Announcement (PSA) Campaign Plan For: Partex Group | ABC PR AGENCY [Document subtitle] | Public Service Announcement (PSA) Campaign Plan For: Partex Group | Course Code & Course Title: MSJ 11345 Created Private Media Term & Year : Fall 2016 Submitted To : Mohammad Shazzad Hossain Lecturer, MSJ Department Submitted By : Muctadir Imam – 131012032 Abdullah All Mamun - 131012056 Sadman Hasan – 131012073 Submission Date: 15th March, 2016 PSA Campaign Proposal CONDUCTED BY ABC PR Agency March 15, 2016 Please direct all of your questions or comments at Contact: 02-9554251 E-mail: abc.pr.agency@outlook.com Block: B; Road: 3; House: 73 2 no. Gulshan, Dhaka – 1212 March 15, 2016 To, The Chairman Partex Group 74 Bir Uttam A.K. Khandaker Sarak, Mohakhali C/A, Dhaka - 1212, Bangladesh. Phone: +8802 8822888 Fax: +880 2 8821888 E-mail: mailbox@partex.net Subject: Proposal for running a PSA campaign for the company Dear Sir, With the due respect we are introducing ourselves ABC PR is an integrated agency with offices in Gulshan, driven by 120 creative, smart and sassy brainiest. We have come to know that, this year your company declared five...
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...Migrating to a Standardized ERP System in a Cloud Computing Environment at ABC Corporation Barbara Ferneyhough Managerial Applications of Information Technology – IS535 (ON) Section B DeVry University, Keller Graduate School of Management December 11, 2011 Course Project Example used with permission from student Migrating to a Standardized ERP System in a Cloud Computing Environment at ABC Corporation Proposal Topic This proposal discusses the use of multiple financial systems throughout ABC Corporation (ABC), the impact that this has upon effective corporate operations and proposes a solution. ABC maintains four different ERP systems (BaaN, PeopleSoft, SAP and Deltek) and a financial consolidation system (Hyperion) across all of its divisions leading to increased IT costs as individual systems must be procured, maintained, and manipulated to provide financial data in a format that is meaningful to the home office for reporting and strategic management purposes. Not only is this a potentially inefficient use of technology, the use of a non-standardized system impacts the ability of management to obtain, manipulate and interpret critical data elements for strategic planning purposes and regular performance monitoring. Problem The business problem to be solved is how to improve operational efficiencies, reduce IT costs, and improve insight into the financial management aspects of the company for improved strategic planning and performance monitoring. Approach ...
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...Riccaboni, John Burns, Mahmoud Ezzamel, Caroline Lambert, Rui Vieira, Aldónio Ferreira, and other participants at the EAA Congress 2002 and IPA 2003 for comments on earlier versions of this paper, and Joao Ribeiro and Jodie Moll for their insights on institutional theory. Also, the authors are grateful to Marconi, and Maria João Mendes and Mário Lima for their support of this project. The first author is grateful to “Fundação Para a Ciência e Tecnologia” for financial support. Extending New Institutional Theory: Regulation and ActivityBased Costing in Portuguese Telecommunications ABSTRACT This paper investigates why a Portuguese telecommunications firm adopted activity-based costing (ABC). Theoretically it draws from New Institutional Sociology. An intensive, holistic case study revealed that ABC was implemented to improve competitiveness and efficiency. However, it was also an isomorphic response to pressures from a chain of institutions, especially its parent company, management consultants, national and European Union regulatory agencies, financial markets, and consumer associations. This private, profit-seeking firm faced institutional and economic pressures simultaneously, consistent with developments in new institutional theory. However, the nature of efficiency, its economic expression, and the impact of regulatory pressures upon departments varied according to their tasks and domains....
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...Introduction: HMT Bearings Ltd. ("HMTB") was incorporated in 1964 under the name of Indo Nippon Precision Bearings Limited. The Company was promoted as a state public sector company by the Government of Andhra Pradesh in technical collaboration with M/s Koyo Seiko Co. Ltd., Japan. It commenced commercial production in 1970. In 1980 the Company became a central public sector undertaking after it was made a subsidiary of HMT Limited ("HMTL"). The vision of the company is to produce & market bearings and other engineering components of world class excellence through total performance leadership. Company is strictly adhered to the standards, specifications stipulated in ISO-9001-2000. Objective: To explore the factors responsible for loss of company HMT Bearings Ltd. HMT Bearings began suffering a liquidity crisis in 1999-2000. It worsened 2002 and 2003, primarily due to a massive inventory buildup and accumulation of uncollected receivables. In mid-2002, the government and HMT Group explored shutting down HMT Bearings, taking the losses and pensioning off the employees. But that plan was rejected, out of concern for the impact on employment and high pension costs, and in the face of intense pressure by the Center of India Trade Union in Hyderabad. Rather than shut down HMT Bearings, government-funded bailouts were instituted, debt was converted to equity in order to eliminate the overwhelming interest expense. The key development in 2002 was the decision to seek a strategic...
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...Government Richard J. Fox School of Business and Management Temple University Privatization of public services to reduce cost and improve quality has a long history. Peter Drucker, the Austrian born management professor, was the first to suggest contracting out of local services to private companies. Indeed many municipal services were already contracted out by 1980 in Great Britain. But the most significant drive for privatization in Great Britain, which signaled the way to the rest of the world, came about with the election of Margaret Thatcher in 1979. In the following decade a host of state owned enterprises were privatized including British Petroleum, British Aerospace, Jaguar, Rolls Royce, National Freight Corp., Cable and Wireless, British Airways, British Gas, British Telecom, several water and electric utilities. In addition, public housing was sold to the residents and compulsory competitive bidding of local services was initiated. By the late 1980’s, Mexico, Brazil, Chile, and Argentina elected presidents who adopted privatization initiatives. But the trend toward privatization was not confined to western countries. The collapse of Communism in the Soviet Bloc prompted the sale of many state owned enterprises as well as other forms of privatization. Even earlier, China in 1978 allowed private farming and later private sector manufacturing and retail operations. And Vietnam allowed private businesses and Cuba allowed homes to be sold to their...
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