Secondly, ABC can enhance decision making due to more accurate activity-driving costs, which can help managers
improve more on product value and the process in which they provide the product. An
activity based costing system can be both expensive and time consuming to develop and implement,
and like most innovative accounting systems ABC can take a long time to successfully implement
into an organization.The issues that a sports franchise would most likely have with trying to
develop and implement an activity based costing system is accurately determining cost objects and cost
drivers. ABC costing in most situations can provide a much more clear and accurate measure
of cost, given a precise cost object. The reason for doing this is that assigning
a cost driver to the food products should not be difficult, and this would make
tracking and assigning chaussures puma costs in the concessions segment of the franchise much more accurate.Activity based
costing can be a magnificent way of accurately assigning costs to all sorts of objects,
and there is no denying that activity based costing can be beneficial when cost drivers
are easily identified. The majority of places that seem to use activity based costing are
businesses and manufactures. It seems as though there are clear cost drivers that can be
assigned to each cost object. Many costs can require complicated allocations to arrive at a
usable cost driver. The last and in my opinion the most crucial when it comes
to sports franchises is the expense and time that can be needed in performing an
accurate activity based costing analysis. Second is the omission of some costs such as marketing,
advertising, research and development that are requin tn part of the product or service costs. Some of
the typical cost that would go into a sports franchise would be janitorial supplies, food
costs, labor, maintenance, salaries, equipment, etc... I will review a few of them. Next is
cost estimation which uses the improved product costs to lead to better estimates for pricing
decisions, budgeting, and planning.Although there are great benefits to activity based costing just like most
other things in life it also has its limitations. The first one is that not
all costs have clear and easy to trace cost drivers. To accurately determine cost drivers
to all of these things seems to be too difficult and not worth the time
or money.However, I do think that implementing an activity based costing system to a more
concentrated area like concessions may have its advantages. Currently pretty much all sports franchises elect
to use volume based costing rather then ABC.I am going to attempt to delve a
little bit deeper into why exactly this is, and determine whether it would make sense
to consider activity based costing.The benefits that could be achieved if activity bade costing were
to be used are extremely impressive. The first is better profitability measures which is primarily
due to the more accurate product costs which in turn leads to more accurate profitability
measurements. However, in the case of a sports franchise I believe that the costs and
limitations may out way the benefits. However, at first glance I do not understand why
sports franchises can't use activity based costing as well. The time and money that would
be needed to successfully implement a well developed system would just not be practical..
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