ACC M118 Lecture Notes - Lecture 12: Performance Measurement, Cost Driver
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Abc can also help a manager to identify the true cost of a firm"s suppliers. Cost of a supplier is much more than purchase price of the components or materials acquired. Assigning cost to suppliers is similar to cost assignments for products and customers. Abc is the key to tracing costs relating to purchases, as well as the quality, reliability, and delivery performance of suppliers. Assigning the costs of supplier-related activities to suppliers follows the same pattern as. The activity dictionary has identified and listed supplier-driven activities such as: Abm can be used for cost reduction. Focuses on cost reduction instead of cost assignment, and. Activity output measure = number of times activity is performed. Driver analysis = effort expended to identify those factors that are the root causes of activity costs. Activity inputs = resources consumed y the acitivty in producing its output. Activity output = result or product of an activity.