INTRODUCTION FOR ACTIVITY BASED COSTING
Activity-based costing (ABC) is one the unique costing used in organisation budgeting process especially for manufacturing and applicable services sector.
This program provides a solid understanding of Activity-Based Costing (ABC) and Activity-Based Budgeting (ABB) as powerful tools for modern cost and performance management. Participants will learn how to identify cost drivers, allocate overheads more accurately, and prepare activity-based budgets that enhance decision-making and operational efficiency.
Who should attend: Entry-level, junior, and senior executives in finance, costing, or budgeting, cost accountants, management accountants, and financial analysts. Departmental managers involved in cost control and budget preparation.
LEARNING OBJECTIVE
On completion of the programme, participants will be able to:-
- Understand the principles and framework of Activity-Based Costing (ABC)
- Identify activities, cost drivers, and assign overhead costs accurately
- Develop Activity-Based Budgets (ABB) aligned with performance objectives
- Analyse variances and link ABC data to managerial decisions
- Use ABC and ABB as tools for continuous improvement and resource optimization
TRAINING APPROACH
Where appropriate, training activities will include the following:
- Interactive Lecture & Videos
- Faciliated Group Discussions & Quiz
- Practical exercises and case studies.
Note: Laptop will be needed for practical exercises activity
COURSE CONTENT
The key content of the program include the following :
Module 1: Foundations of Activity-Based Costing (ABC)
- Traditional costing vs Activity-Based Costing
- Limitations of volume-based costing methods
- Key concepts: activities, cost pools, cost drivers
- Benefits of adopting ABC in modern organizations
- Learning Activity: Mini case exercise – identify activities in a manufacturing or service environment
Module 2: Activity-Based Costing calculations
- Identifying cost activities and assigning resource costs
- Determining cost drivers and allocating overheads
- Computing product/service cost using ABC model
- Calculation of activity driver rates
Module 3: From Costing to Budgeting – Introduction to Activity-Based Budgeting (ABB)
- Relationship between ABC and ABB
- Linking activities to organizational objectives and performance measures
- Steps to develop activity-based budgets
- Aligning resource requirements with activity levels
Module 4: Integrating ABC and ABB for Decision Making
- Analyzing cost behavior and activity levels
- Using ABC/ABB data for decision support (pricing, outsourcing, cost reduction)
- Identifying value-added vs non-value-added activities
- Case examples: improving profitability via cost optimisation through ABC insights
Module 5: Performance Management and Continuous Improvement
- Linking ABC and ABB to Key Performance Indicators (KPIs)
- Variance analysis under activity-based budgeting
- Using ABC information for strategic decisions and benchmarking
- Sustaining ABC systems: review, update, and integration with ERP
- Workshop – creating an ABC-based dashboard and variance commentary
