Benefit of changing to Activity Based Costing system

(Henricks , 1999

The ABC system has helped the DHL Company to answer the market need in providing quality service at a better and competitive price . This system has helped the company 's to management in the decision making process (Hicks , 1998 ) This has helped the company to reduce the price of their services without a decline in value of their services (Hicks , 1999

The benefits of the ABC system are now in use in most institutions that include the government departments and the public financial institutions . The Barclays bank New York changed its

accounting method to provide accurate and cost effective data . Through the change to ABC the Barclays bank has particularly found it helpful compared to the former funding based accounting systems that was designed for ensuring legal compliance (Paulo , 1998

In the use of ABC , the managers are able to direct funds where they are more beneficial . They are able to learn the weaker points in the organization making it easy for them to implement the most beneficial activity in the business (Robert , 2004

The managers in Barclays bank found that ordinary accounts were not doing much well compared to loans , they campaigned for people to take more loans at simpler rates and prolonged repayments period , and this increased to Banks profits than ever . The bank is launching new loan strategies that are expected to double the profits (Robert and Bruns 1987

A model was designed to summarize the ABC process

Activity-based costing model retrieved from HYPERLINK "http /www .12manage .com /methods_abc .html http /www .12manage .com /methods_abc .html

The ABC is also important for it helps in estimating the cost per time unit in a given capacity . Instead of surveying how the employees are spending their time , managers concentrate on what capacity they supply in a given...