Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

16.4.3 Typical Processes (Activities) and Process Variables for Activity-Based Costing

Intended learning outcomes: Explain determining main processes and subprocesses, using the example of circuit board assembly. Describe determining main processes and subprocesses using the example of procurement.


The following example, taken from [Schm92], shows how ABC is used in practice in the areas of production and purchasing. Figure 16.4.3.1 shows assembly of a printed circuit board, together with the main processes and subprocesses (activities), as well as the associated process variables.

Fig. 16.4.3.1       Determining main processes and subprocesses; example: circuit board assembly.

Figure 16.4.3.2 shows activities in a conventional purchasing department.

Fig. 16.4.3.2       Determining main processes and subprocesses; example: procurement.



Course section 16.4: Subsections and their intended learning outcomes

  • 16.4.4 Activity-Based Product Cost Estimation

    Intended learning outcomes: Produce an overview on Determining the process cost rate and process quantity for supplier management. Explain determining the process cost rate as well as the process costs for external procurement of a single item: “standard component” versus “exotic component.” Present in detail an ABC process plan and activity-based product cost estimation for a produced item as well as for a procured item.

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