Activity-Based Costing Course

Lesson 1 • Overhead Cost Pools and Allocation Bases

Introduces cost pool construction and the logic of matching pools to allocation bases. Bridges traditional pooling to ABC pool design.

Lesson 2 • Cost Behaviour and Cost Drivers

Analyses how costs respond to changes in activity levels and identifies appropriate drivers. Prepares students to select ABC drivers accurately.

Lesson 3 • Traditional Costing System Overview

Explains volume-based overhead allocation using plantwide and departmental rates. Reveals why simplistic drivers distort product costs.

Lesson 1 • ABC System Design Decisions

Addresses trade-offs in system complexity, number of pools, and driver selection. Students can balance accuracy against implementation cost.

Lesson 2 • Activity Drivers and Cost Assignment

Covers selection and measurement of activity drivers to assign pool costs to cost objects. Completes the second stage of the ABC model.

Lesson 3 • Resource Drivers and Activity Cost Pools

Explains how resource costs are traced to activity cost pools using resource drivers. Accurate resource tracing is the first stage of ABC.

Lesson 4 • Activity Identification and Classification

Teaches how to identify, name, and classify activities into unit, batch, product, and facility levels. Correct classification drives accurate cost assignment.

Lesson 1 • Mapping Resources to Activities

Demonstrates how to trace general ledger accounts to activity cost pools using resource drivers. Accurate mapping ensures valid first-stage allocation.

Lesson 2 • Scoping and Planning the ABC Project

Defines project boundaries, stakeholders, and data requirements before implementation begins. Proper scoping prevents costly redesign later.

Lesson 3 • Conducting Activity Analysis

Teaches interview, observation, and survey techniques to document activities and time usage. Activity analysis is the empirical core of ABC design.

Lesson 4 • Calculating Activity Rates

Walks through the arithmetic of dividing pool costs by practical capacity to derive activity rates. Rates are the pricing mechanism of the ABC model.

Lesson 1 • TDABC Concept and Motivation

Explains why traditional ABC surveys are costly to maintain and how TDABC simplifies the model. Positions TDABC as a practical evolution of ABC.

Lesson 2 • Estimating Capacity Cost Rates

Covers how to calculate the cost per unit of time for each department or resource group. The capacity cost rate is the foundation of every TDABC model.

Lesson 3 • Updating and Maintaining TDABC Models

Addresses how to revise time equations and rates when processes or costs change. Regular updates keep the model accurate without full redesign.

Lesson 4 • Applying TDABC to Transactions

Demonstrates how to multiply capacity cost rates by transaction time to assign costs. Students produce accurate order- and customer-level cost reports.

Lesson 1 • Profitability Improvement Strategies

Translates ABC profitability findings into pricing, mix, and process improvement actions. Connects cost analysis to revenue and margin growth.

Lesson 2 • Product Profitability with ABC

Uses ABC costs to compute accurate product margins and identify cross-subsidisation. Replaces distorted traditional margins with reliable data.

Lesson 3 • Customer Profitability Analysis

Assigns selling, service, and support costs to individual customers using ABC. Reveals which customers generate or destroy value.

Lesson 1 • Short-Term Operational Trade-offs

Applies ABC to constrained resource decisions, special orders, and product discontinuation. Ensures relevant cost logic is applied correctly.

Lesson 2 • Capacity Management Decisions

Identifies unused capacity costs and guides decisions to eliminate, redeploy, or sell capacity. Links ABC idle capacity data to operational action.

Lesson 3 • Make-or-Buy and Outsourcing Analysis

Applies ABC to compare internal activity costs against external supplier quotes. Reveals true cost of in-house production versus outsourcing.

Lesson 4 • Cost-Based and Value-Based Pricing

Uses ABC unit costs as a floor for pricing decisions and integrates value-based adjustments. Prevents under-pricing of complex, high-cost products.

Lesson 1 • Building the Business Case for ABC

Quantifies expected benefits and costs of ABC adoption to secure executive sponsorship. A strong business case is the prerequisite for organisational commitment.

Lesson 2 • Sustaining and Governing the ABC System

Establishes ownership, update cycles, and governance structures to keep ABC relevant over time. Without governance, ABC models become stale and unused.

Lesson 3 • Pilot Design and Phased Rollout

Guides selection of a pilot scope and criteria for scaling ABC across the organisation. Phased rollout reduces risk and builds internal capability.

Lesson 4 • Technology and Data Infrastructure

Reviews software options, ERP integration, and data extraction requirements for ABC. Technology choices affect model accuracy and maintenance burden.

Lesson 1 • ABC and the Balanced Scorecard

Aligns ABC activity costs with balanced scorecard perspectives to link cost to strategy execution. Produces a unified performance management framework.

Lesson 2 • Enterprise-Wide ABC and Consolidation

Addresses multi-site, multi-division ABC models and consolidation of results for enterprise reporting. Enables group-level profitability and cost visibility.

Lesson 3 • Evaluating and Evolving the ABC System

Provides frameworks for auditing ABC model accuracy and deciding when to redesign or replace it. Ensures the system continues to deliver decision-relevant information.

Lesson 4 • Target Costing and ABC Integration

Uses ABC to decompose target costs by activity and identify design-stage cost reduction opportunities. Integrates ABC with new product development processes.