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Course

ABC Costing

PrimeZone software facilitates calculations that assist in determining product profitability. Certain overhead costs which are typically accumulated against items by attaching elements of cost at the transition points of purchasing, manufacturing or selling, often comprise a significant portion of the total cost of a product and can impact profitability.

The benefits of ABC Costing

However, traditional costing methods of loading overheads against a product according to the labor content becomes increasingly inaccurate when processing a diverse range of products, particularly where disparate overhead usage is involved. PrimeZone activity Based Costing (ABC) allows for the accumulation and recovery of costs associated with the urchasing, manufacturing and selling of items, thereby facilitating accuracy in calculating product profitability. ABC is not another inventory costing method (e.g. Average, Standard, FIFO, LIFO and Last) but, rather, it provides a different method of calculating these costs.

  • User-defined elements of costs attached to transition points in the purchase, production and sale of products
  • Pre-production costs are apportioned as stock is received from Purchasing
  • Manufacturing costs are apportioned as stock is received from Work in Progress
  • Post-production costs are distributed through cost of sales as the final item is invoiced
  • Calculation of single batch or item-based activities
  • Phased implementation supported