Activity-Based Cost Management

AutoSoft Systems

2 Round Hill Court

East Greenwich, RI 02818

401.885.3631

401.884.5653 Fax

401.996.3631 Cell

AMDG

"Once you know it, it's Easy!"

autosoft@aol.com

Commercial and custom computer related products spanning the areas of data acquisition and control, simulation and modeling, numerical analysis, chemical process design and manufacturing management information systems design. Founded in 1982.

We know Excel! Whenever possible, Excel is the user interface, VBA is the programming language, ODBC connects to the database of your choice.

Pharmaceutical & Biotech

Construction Management

AMDG

Activity-Based Cost Management (ABCM.xlsm)

Activity-Based Cost Management is an analysis technique that has been around for decades. It allows an organization measure the profitability of various subsets of its operation. Typical subsets will include:

- Time Period

- Territory

- Product Line

- Engineer

- Customer

- Customer Class

- Account Manager

- Market

- Sales Rep

- Product Number

- Regional Manager

- Any other quantifiable invoice characteristic

The SMART implementation starts with the AXIOM Sales Margin Report. ABCM automatically imports all invoices, debit and credit memos for the desired time period. The columns from the AXIOM report define the various "invoice characteristics" that are used later for ABCM analysis.

There is a companion worksheet, the Allocation Table, where the user defines how to allocate costs across the different transactions on the ABCM.xlsm workbook. The user simply enters "TRUE" to identify the values for the invoice characteristic which whill share in absorbing the costs asociated with the designated line item.

In the above example, there are 12 different general ledger expense account numbers listed. 6 are to be spread using the Invoice Extension as a basis, the other 6 will use the Invoice Cost Extension as a basis. C&M has two production facilities in this model, "01" and "OS". All but one general ledger accounts are to be spread only across the invoices originating from the "01" facility. Only one account "Sales Wauregan Expedite ..." is to be spread across both facilities. Also note the different "Order Types". Some expenses will be spread across invoices of all Order Types, others for selected Order Types.

In C&M's implementation this process is continued for Product Lines, Customer Classes, Regional Managers, Account Managers and even in some cases specific customers. The inherent flexibility of this process makes it easy to define the invoice characteristics specific your own company. Note in this example, Regional Managers and Account Managers are user data fields.

The last step in the data input is to enter the actual income and expense items for each time period. This example shows bogus numbers for illustrative purposes only. Again, the standard AutoSoft/SMART convention of yellow background and dark red font for data entry cells. Note the blue "SUM CHECK AND HIGHLIGHT EXCEPTIONS" button which does validation of the entries and indicates any potential data entry errors.

The green "UPDATE" button is pressed and the ABCM program does the work.

AutoSoft Systems | 2 Round Hill Court, East Greenwich, Rhode Island, USA 02818 | 401.885.3631 | Fax: 401.884.5653 | Mobile: 401.996.3631

This web page was last updated at 02/19/2011 12:20 PM and is written in EXCEL!

AXIOM is a Trademark of Consona - USYS is a Trademark of Zumbach - AutoSoft Systems is not affiliated with Consona nor Zumbach