Activity-Based Cost Assignment System
Designing ABCAS

At the designing phase of ABCAS and Enterprise system, the organization’s business processes are to be divided into activity-units with following categories:

  1. Production Activity-Units, which produce outputs of the organizations, i.e. products and services
  2. Intra-Service Activity-Units, which provide services to other Activity-Units internally

We then assigns multi-layer cost pools to the activity-units, based on the relationships and functions of these units.

Various activities are extracted from the organization’s business processes and the cost drivers are assigned to the activities based on the nature and the behavior of the activities.

Implementation of ABCAS

Following the Business Analysis/Designing phase, the operative ABCAS, along with enterprise system, can be smoothly implemented by deploying a pattern framework environment, such as The PEXA® Conceptual Pattern Framework*.

The PEXA® Conceptual Pattern Framework is designed as a very flexible conceptual basis with master-driven architecture, and various processes, patterns and logics can be implemented by setting up meta-masters and masters.

As The PEXA® Conceptual Pattern Framework eliminates most of the code writings and substantially shortens the development phase of system implementation even for a complex and intricate ABCAS and enterprise system, you can spend more time more on the Business Analysis/Designing phase, which is vital for successful system implementation.

Operation of ABCAS

Once implemented, ABCAS works as follows:

  1. When the costs are incurred, ABCAS recognizes the costs at Cost Accounts, which correspond to ledger accounts.
  2. ABCAS assigns the costs to the Activity-Units’ Cost Pools (Control Accounts), as a group or individually, on the basis on the Dynamic and/or Static Cost Drivers.
  3. At the periodic (monthly) closing,
    1. the aggregated costs at the Cost Pools of Intra-Service Activity-Units are assigned to the Cost Pools of the Production Activity-Units based on Dynamic Cost Drivers; and
    2. All the costs at the Cost Pools of Production Activity-Units are assigned, daily-basis, to the Cost Pools of the organization’s output (Products and the Services) based on Dynamic Cost Drivers.