|
|
Activity-Based Costing/Management
ABC/M contains two key methodologies that provide
the link between financial and performance data - Activity-Based
Costing (ABC) and Activity-Based Management (ABM).
Activity-Based Costing:
- A management tool that captures the cost of performing work
for a specific result at a sufficient level of detail to understand
the costs of activities.
- Methodology: Employees define the work that must be completed
to achieve the outputs and outcomes identified in the GPRA Performance
Plan. The work is broken into activities that describe the consumption
of resources or cost associated with doing that work.
- Allows managers to quickly reveal and target work activities
where inefficiencies may exist - what emerges from the ABC methodology
is a much more accurate picture of what is being achieved in relation
to what is being spent.
- Not a new financial accounting system, but a costing approach
that provides a different, more effective way to view and interpret
managerial cost and performance information - rather than report
costs just by object class or division, ABC/M assigns resources
to work activities so they can be viewed from an operating business
process perspective. Traditional costing reports what is being
spent where ABC reports how the money is being spent:
| Traditional Costing |
Activity-Based Costing |
| Division | Cost |
|---|
| Employee Salaries | $3,000,000 |
| Personnel Benefits | 250,000 |
| Travel and transportation of things | 550,000 |
| Communications, utilities, & misc. | 200,000 |
| Contracts | 900,000 |
| O & M equipment | 600,000 |
| Supplies and Materials | 400,000 |
| Total | $5,900,000 |
|
| Work Activity | Cost |
|---|
| 7ZE7: Implement Candidate Conservation Actions | $1,500,000 |
| 7Q4S: Manage and Protect Marine and Coastal Habitats | 1,100,000 |
| 021T: Develop Aquatic Habitat Management Plans | 2,400,000 |
| 7PD8: Prevent, Manage, and Control Invasive Aquatic Plants | 900,000 |
| Total | $5,900,000 |
|
Activity-Based Management:
- Takes ABC one step further by using ABC information and incorporating
techniques that focus on specific areas of inefficiency to identifying
potential improvement opportunities
- A management tool used to understand the performance resulting
from work activities created by ABC - the availability of cost
information at the activity level creates an entirely new dimension
to assess performance and results - understanding that information,
program managers and employees can decide where scarce dollars
will create the most return, how the process of doing the work
can be improved thereby making resources available for other work,
and how much work can be accomplished with available resources
Read An
Introduction to Activity-Based Cost Management at the Fish and Wildlife
Service to learn more.
View a list of Basic
Terms, Definitions & Concepts.
View the FWS
Integrated Managment Framework.
|