29.08.2019
 Essay regarding AMA

Table of content

1 . Outline of chosen Hong Kong company……….. ……. ………………. L. 3

2 . Characteristics associated with an organization adding to the use of activity based approaches …………………………………………………………. ……P. 4-5

three or more. An appropriate ABM example in chosen company……...................................................................................... P. 6-8

4. The way the ABM info can be used by managers…………………. ……………………………………... ………. G. 9

5. Problem creating an organization to choose not to employ or to forego use of activity based techniques…………………………………………P. 10-P. 10

6. Research List………………………………………………. ………………….. ……P. doze

Luen Yick Electrical Mfg Co., Limited.

Since late 1960s, the group has been a company of electric accessories and

lights with a broad variety of furniture and bathroom signals, fluorescent,

economical and LED lighting products towards the international marketplace. From

product design to final assembly, all development processes are executed in-house,

making customizing products easy for all of us.

Number of personnel: 201-500

Year Established: 1968

Nature of Business: Production

Major export markets: Hk

Products as well as Services: electric powered accessories and lighting products

Activity Based Priced at (ABC) can be described as costing technique used to search for overhead costs directly to cost things, i. elizabeth. products, processes, services, or perhaps customers. Costs are assigned to particular activities (e. g. architectural, manufacturing or perhaps purchasing) depending on their utilization of resources and costs happen to be assigned to cost items based on their particular use of activities. ABC acknowledges the origin relationship of cost individuals to actions. ABC methods enable an enterprise to decide which will products, providers, and assets are increasing their success, and that happen to be contributing to loss. Certain organizations appear to be more fortunate in applying ABC than others. FONEM helps the managers during these organizations to make the right decisions regarding product mix, pricing, process improvements and merchandise designs. Deeper look reveals characteristics of the organization just like structure, range of products or environment contributing to these kinds of successes. Expense Structure

In which overhead costs comprises major part of product costs as compared to immediate costs including direct time and direct materials, properly attributes overhead costs to system is highly important. In modern organization, service departments plays a far more and more important role than in the past by which production office is mainly accountable for key manufacturing activities. Total product and service costs are more inspired by study, materials handling, procurement, tools maintenance, quality control and customer service requirements than by simply direct labor or direct materials. Therefore , ever-increasing cost of these assistance departments has to be traced for the final product so that right pricing and product mixture position may be made. FONEM is certainly excels traditional charging method which in turn distribute over head cost employing an over head charging level. On the other hand, if indirect costs make up a family member small portion of total costs in certain industries it may not be worthwhile investing in sophisticated accounting methods to allocate indirect costs. Traditional priced at systems may well not result in the confirming of really distorted costs in this case.

Product Range

One homogeneous overhead rate is no longer a proper average intended for overhead cost allocation in company that involves huge product variety and product line complexness. Since overhead resources are being used by different products and catalog at significantly different costs, a change in product mixture can lead to considerably cost improvements that will not end up being predicted effectively by traditional cost systems. Arbitrary costs under traditional costing method leads to wrong make/buy decisions. Therefore , companies with large product range are more prone to acknowledging ABC techniques...

References: 1 . Roztocki, N., Valenzuela, L. F., Tenir, J. Deb., Monk, R. M., and Needy, K. L., 1999, " A Procedure for Clean Implementation of Activity Primarily based Costing in Small Companies", Proceedings from your 1999 ASEM National Convention, American Culture for Architectural Management, pp. 279-88.

2 . Dr Pavlatos Odysseas, 2008, " Information into elements affecting the adoption of ABC systems in the food industry: data from Greece”, Department of Economics, University or college of Crete Panepistimioupoli Gallou, Rethimno, Greece

3. Roland Bardy and Al Hartgraves, ABC: pitfalls & complications – tricks & remedies. Is there a " transatlantic divide"?, Goizueta Organization School, Emory University, Atl, GA 30322

4. Kengo lighting organization

http://www.kengo.com/ [accessed 20. 3. 2015]