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Dear John
The book said : ” ABC has evolved as a response to the increase in ” support activities” in modern organisation as well as the falling cost of process information used in making management decision.
Would you explain for me the meaning of the phrase ” falling cost of process information used in making management decision” , why it happens when using ABC and why ,when using Traditional costing lead to ” high information processing cost”
The cost of processing information has fallen because of the use of computers and advanced management software.
Before this became available it would often be too time-consuming / expensive to get the information and analysis needed to be able to use ABC.
Thank you alot, would you explain for me the meaning of “number of invoice” and ” number of invoice lines” in the “Invoice processing”,what is difference between 2 term?
I do not know which book you are talking about. You refer to ‘the book’ but it is obviously not our Course Notes (which are the best ones to read to prepare for the exam!)
However, ‘number of invoice’ is fairly obvious – it is how many invoices there are.
Each invoice could be for more than one thing – there can be several lines on the invoice. For example, the invoice could have one line saying ’20 units of product A at $10 each’ and another line saying ’30 units of product B at $5 each’.
So the number of invoice lines will be the total number of lines on all of the invoices.
It’s very useful, now i understand the substance, the problem i got comes from the BBP revison kit. I’m still using the video lecture and course note of Opentuition. Awesome!!! I appreciate it. Thank you alot.
Dear John,
Would you explain for me the meaning of ABC in following sentence :
a) Different activity levels will provide a foundation for the base package and incremental packages of ZBB
the problem i got here is “Is it mean transfer from using ABC to Zbb or combine them together”
base package is a essential minimum level for operation and incremental package is optional additional activities, activity levels is the usage of cost driver( I think so), so why the different active level provide a “foundation” for these packageb) In the benefit of rolling budget, they said realistic budget are likely to have better motivational influence on manager. Why they have a better motivational?
Zero based budgeting involves looking at alternative ways of doing things, costing them out, and then choosing the best (instead of as with incremental budgeting, just continuing to do things the same way as in the past).
The connection with ABC, is that having identified the different activities using ABC, these then can become to areas to look at when deciding on different ways of doing things.The more realistic the budgets are, the more motivated managers will be to try and improve on them. If the managers are given a budget that is not realistic and that they know that they cannot achieve, then they will lose motivation to try and do better.
Hi
Would you please explain for me the meaning of this sentenceIf ” incentive schemes” are based on the the budget setting process it may be argued that ZBB encourage goal congruence through the flexibility.
What are the “incentive schemes” and how they encourage goal congruence through flexibility,Thank you alot!
Although I will answer you, this has nothing to do with ABC which is the title of this thread.
In future if you want to ask about something else, then please start a new thread.Incentive schemes are schemes where you reward people for doing better. For example, you might promise to give a manager a bonus if he makes more than the target profit. You might offer a manager a bonus if he spends less than the budget amount.
To achieve goal congruence we need to try and make sure that what is good for the manager (i.e. what will give him/her their bonus) is also good for the company.
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