HI6006 Competitive Strategy Editing Service
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The utilisation of activity-based costing in the field of business organisations around the world is quite obvious and is noticed in every case scenario. With the opportunity taken into consideration related to Income expenses or disbursement of profit, activity-based costing has clearly stated its importance in the budget business development field. The utilisation of activity-based costing in the field of cost allocation and understanding of respective cost centres are gradually being increased towards larger consent of business organisation. Most importantly it is observed and understood that the relationship between the total cost and the drivers of cost are actually understood from the evaluation of the activity-based costing system. The contextual understanding of the informative factor of activity-based costing system is all related to the group of variable semi-variable and fixed.
The storage cost proves to be an important factor while discussing the division of these 3 types of cost in accordance to the activity-based costing system. Different operation in a business organisation which relates to direct cost or indirect cost or allocation made through rational heads of total sales can be justified and evaluated with the proper implementation of activity-based costing system (Kerzner and Kerzner, 2017). The activity-based costing system works in accounting science manner where we see that the amount of canteen food to be distributed is actually based upon the number of employees working in an organisation. Similarly, the rent of a building is determined by understanding the number of rooms the building has. This easy formulation of basic is actually determined by activity-based costing system making it one of the most improved and essential way of Costing.
Implementation of every new format of Costing system in an organisation has its own positive and negative impact. The following discussion is related to the positive factors that activity-based costing strategy has on an organisation:
With the implementation of activity-based costing strategy calculation of the cost of the product with the help of proper allocation is easily completed (Mukhopadhyay, 2015). Determining the way for actually allocating proper cost through a standard procedure of allocation is driven by the implementation of activity-based costing strategy.
With the implementation of the strategy there increases are a huge chance of developing A proper and effective cost manufacturing process. The utilisation of this strategy would also help in understanding the critical way of pricing a process that may lead to an increase in profit. activity-based costing system does not guarantee success but it clearly provides a better way to allocate price on the certain usage of material that may lead towards a determining future for an organisation (Gertler and Karadi, 2015).
To calculate proper manufacturing overhead by understanding the profit margin and absolute way is provided when the activity-based costing strategy is implemented.
ABC strategy helps in the identification of unwanted processes, inefficient way of doing and unnecessary price hike of products, help in eliminating the extra cost that helps in the maximisation of profit margin.
The following are the demerit or negative factor when the activity-based costing approach is implemented:
There can be a huge amount of variation in the result obtained with the implementation of activity-based costing system and traditional ways of measuring the costing activities (Johanson and Mattsson, 2015).
Activity-based costing system is clearly time-consuming and requires skilled workers to work on this method.
Following accounting Principles is important and not considering a single amendment in the costing standard of accounting may lead to a devastating result of cost analysis and allocation. (Dennis, Wixom and Tegarden, 2015)
The proper utilisation of activity-based costing strategy requires in-depth knowledge that somehow hinders the fast working of an organisation.
The following segment of the report will be providing critical evaluation and analysis of the article presented by Veyis Naci Tanis and Hasan Özyapici, which is “The measurement and management of unused capacity in a time driven activity-based costing system”. The segment will also provide analysis in a critical format over the article “The value of activity-based costing in competitive pricing decision” by Warlop Luk, EddyCardinals; and Filip Roodhooft.
The discussion and evaluation of the primarily named article we can understand that the equalization is the implementation of activity-based costing system helps in industries related to manufacturing work mostly (Ricci, Rokach and Shapira, 2015). The implementation of the strategy is quite effective when it comes to determining the price that is to be required to impose over processes in use. The approach of the activity-based costing system is quite relevant in terms of getting the feedback of competitors, through the efficient decision-making process and helping in rejecting the less important processes cost incurred by an organisation.
Fixing of price in the existing market condition is quite important and responsible for gathering every success that an organisation has in terms of accounting benefits and profit maximization. The following study groups to be important in terms of evaluating the approach importance. The following study help in clarifying the effect of the price calculation ineffective measure. The importance and the effectiveness of multi-market price fixation technique along with that of Costing techniques through traditional method are discussed in the following study with an evidential example. The discussion regarding the issues that generally occur due to over-allocation or under allocation of price on the processes that are generally incorporated by the organisation is clearly evaluated in the following study.
Articles by the writers are filled with biases costing method system where the market price gets affected and is generally not noticed. Considering the biasedness to be eliminated to hypothesis was created to ensure that evaluation in actual term can be provided. The first theory was related to the profit and price is optimal when a positive review is received by an organisation from the customer. Where is the hypothesis in the second situation constructed that the feedback from the market is informative in the situation where the technique of activity-based costing fails to evaluate the biased cost data (Yardley et al. 2015)
In relation to the conducting of the experiment to evaluate the hypothesis around 131 participants were taken into consideration by providing they were from the field of financial management and accounting. All the 131 participants were provided information related to costing technique. The activity-based costing approach and traditionally based costing approach. Every aspect of the approaches different activities, ordering and handling approaches the difference. After considering every approached possible the activity-based costing approach was provided to the market segment in their cost driver aspect. The inclusion of software handling, deliveries and the total number of orders were included in terms of the ABC approach. The authentic result and the examination of the impact of profit over a different period of profitability was the prime objective of the research on 131 participants.
For the easier, your purpose of method acting, five results from the very first area took distinctively and considered under average value for understanding the feedback from the market feedback upon the report presented on accounting purpose which was somewhat found easily upon the date of examination.
After proper evaluation, it was noticed that the second hypothesis considered was actually to be rejected. The hypothesis got rejected because it was observed after considerable analysis that the competitors are operating in places where the information are not detailed or the competition in the market is not analysed properly. The cost activities are seen to be suitable when the host driver is provided with the relevant cost for the product.
After going to the aspect orally we get to know that the prime questions related to the article were to understand the capacity that remains initialised in a firm under the costing system generally known as bias costing system. It was noticed that the companies evaluate compulsory and unused capacitive as a must to ensure that the technique of activity-based costing does not go to waste and remains under the opportunity of ultimate cost management system. The aspect of activity-based costing system is in relation to the advanced cost-efficient method web optimisation of resources is put on two best position opportunity. The constraints that are all generally observed under this method of Costing system relate to the understanding of the case study where utilisation of resources is not proper (Clayton and Radcliffe, 2015).
In response to the time given system in the activity-based costing, the approach is actually operated. The tool in the contemporary format of activity-based approach is diploid or implemented in order to improve the competitive advantage. The competitive advantage is generally observed efficiently where the cost per unit of resources is actually calculated. The cost per unit resource when calculated wants help in understanding the Prime Focus to eliminate the unnecessary process allocation. By eliminating the unnecessary process allocation the activities of the services to the clients which are not necessary are actually resulting in maximization of profit. When the calculation is done in the capacity of practical explain the cost per unit is based upon the effective hours. Be effective hours can range from 80 to 85% of the total hours which companies 40 hours per week work. When we consider a machine to be working in an organisation we observe that the working hour is actually presented to 50 hours a week. With a proper valuation of the hours per week working there is a justification that the actual work period is 40 hours per week where the major focus area was the determination of the unnecessary time, where the machine was actually turned on (Hitomi, 2017).
The objective of the activity-based costing approach is to make sure that your organisation behaviour in implementing the game of oxygen competitive advantage. Achieving a possible competitive advantage helps in understanding whether the activities, services are the products that have been provided to the client needs to be changed or must be kept similar. For every constant opportunity of focus element the activity-based costing system approach helps in identifying the important aspect that must be kept within the operation. Calculation of the practical capacity that is generally observed one must be clear about the operation that an organisation does because the activity-based costing system evaluates and analyses the approaches that are to be considered when processes price or allocated within an organisation. The objective of the ABC approach is related to the basic condition of operation where the management organization is considered under the application of different work procedure. The effective work and the criteria for the calculation are on the basis of resource management. The otherwise effective work period is not evaluated when the management of an organization does not consider the operation in traditional or ABC approach (Rushton, Croucher and Baker, 2014).
The consideration of TDABC verifies its operation in Organisation results in understanding the effective calculation for activities letter to client satisfaction through Service Management. The evaluation and the improvement of the competitive advantages through the costing system of the activity-based approach are quite effective when inculcated under the cost allocation of an organisation. However, the article presented have clearly involved aspects related to cost per unit and the number of products provided by the organisation.
After the evaluation of both the articles, we can clearly justify that there are few similarities and dissimilarities between the views and the author of the idea of Two articles presented respectively. The similarities that were found by going through to article of respecting others are providing below:
The objectivity to create techniques of Costing in order to make sure that failures of traditional costing methods can be mitigated both the author have suggested in their respective article that utilisation of new method like activity-based costing for minimising the cost expenditure is important. This clearly evaluates that the provide station needs to make proper amendments where their unnecessary expenses in a process that does not count too much importance must be taken care of (Buede and Miller, 2016).
Another similarity that is seen been indicated is the situation where the need for proper time management work as discussed in both articles. By properly understanding the importance of minimising the inefficient areas of operation many organisation has benefited from this chapter by eliminating and minimising the cost that they used to procure behind every manpower distribution.
The differences that were identified after going through the article presented by respective authors are as follows:
The real focus of minimising the cost incurred in not many important processes of an organisation may lead to the situation where the focus towards the greater achievement of assistant work may go down. It may result in the situation was the company might reduce the cost incurred in the different process but on the other hand also result in inappropriate cost delivery over process without understanding the pros and cons (Avgerou and Walsham, 2017).
Another dissimilarity that is noticed specifically after going through the article is the improper evaluation of cost drivers. It is seen that the activity-based costing system is quite effective in its operation but there are situations where the time given the activity-based costing system proves to be important and are quite effective in nature. The consideration of the procedure of an individual unit of time is made it to the situation where the simplification of the process is actually evaluated by the time-driven cost method (Harris and Roach, 2017).
After the proper consideration of both the similarities and dissimilarities, we understand that there are discrepancies visible the utilisation and activity-based costing around the world. The different ways that are incorporated for the implementation of every activity-based costing system create the prime issues within an Organisational Management. Most importantly we have observed that the discussion and the evidence that was provided by the author of the article respectively where quite real and where is related to daily organisational work life.
With all the similarities and dissimilarities between the articles presented by respective authors, there is objectivity that directly linked to the situation where the company always wishes to make sure that their activities are considered to be cost benefited. With an in-depth understanding of the ideal presented in the articles, we get to know that the investment of an organisation needs to be in understanding the requirement related to the increased profitability and not in a situation where that's why minimising every expense they wish are not important
The elementary or primary finding that was actually discussed in the former case study are as follows:
The following of particular rules and regulation related to principal set by existing market players is important and therefore every new entrant in the market approaches the existing market operators to ensure the principal and maintain a proper dignity in an activity-based costing system (Naci and Hasan, 2012).
The fixation of price is another concept that is being been inappropriately reflecting less amount of profit than it is acceptable as actual. The analysis of the concept and the results also show that the competitive price elevation without wrong allocation of cost is quite apt and therefore allocating work in accordance to the time based upon the process is provided by the managers (Visinescu, Jones and Sidorova, 2017). Although it is also observed that the activity-based costing system cannot help determine an organisation the processes they need to keep even after seeing that the importance of the process is not much when considered to other processes.
The technique of activity-based costing system is considered by every Organisation in order to make sure that your feedback both positive and negative or properly evaluated towards better management of volume based costing system. The proper way of approaching new ways and techniques are related to that of Impact over Price and Demand. It is also noticed that the product with lower prices from the competitors in the UK have any impact on the activity-based costing with them to make their activities more effective and less expensive
The next article provided information that is provided below:
The management of an organisation clearly relates to the understanding of cost-effective process where the significant area of an organisation is evaluated properly to ensure better operation for the future (Goldmann, 2016.
Time-driven activity-based cost system focuses upon utilisation of machines in the proper time period which minimises major issues like overexertion of resources in an organisation.
From the above informative report, we see that there has been a critical evaluation of two articles presented by respective authors. With the evaluation of the article, the similarities and dissimilarities that were found seem to be important in understanding the effectiveness of Time-driven activity cost approach. The effectiveness of the report is found from understanding it nature of analysing phase where every aspect of positive and negative factors are discussed openly. The importance of activity-based costing in the field of analysing the effective processes to be utilised in the organisation has been clearly discussed in the above report.
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