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 Activity-Based Costing
Intended learning outcomes: Disclose the limits of traditional product costing. Explain activity-based costing: aim, basic premise, requirements, and technique. Present typical processes (activities) and process variables as well as the activity-based product cost estimation.
16.4.1 Limits of Traditional Product Costing
Intended learning outcomes: Describe allocating fixed costs to products with conventional cost accounting using two cost types. Explain the potential for error in traditional product costing.
16.4.2 Introducing Activity-Based Costing: Aim, Basic Premise, Requirements, and Technique
Intended learning outcomes: Produce an overview on activity-based costing. Identify ABC process, process variable and process cost rate. Describe the ABC process plan and the process quantity. Explain allocating fixed costs using activity-based cost accounting.
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.
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.
