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Activity Based Costing has its roots in manufacturing. It seeks to assign a truer value of the costs of a product, service or customer by calculating the cost and then unit of all the activities required for production and applying a more accurate count of the number of activities required, so that a truer cost is calculated.
Typically, Activity Based Costing will result in less cross product, service and customer subsidy and in a lower cost for high volume products and a higher cost for low volume products.
In many organisations, one of the prime cost of providing products and services is the resource, or people, involved. And a greater proportion of this resource is high cost, high value professionals and other knowledge workers.
TimeSheet Professional is well suited to capturing the time spent on activities for Activity Based Costing – and, if appropriate, Sage.
TimeSheet can also be used to capture activity volumes, providing one of the key metrics required for Activity Based Costing.
Activity Based Costing in knowledge-based environments, such as financial services and consulting and local and central government, is well suited to being modified to Deliverable Based Costing, where a series of deliverables is defined, each of which may include overlapping activities. This can provide a far more effective result whilst significantly reducing the cost of definition, tracking, calculation and monitoring.
In reality, many organisations will include elements that are better costed with conventional project costing or project accounting, using project time tracking.
In TimeSheet Professional, with careful implementation, this can successfully exist alongside Activity Based Costing or Deliverable Based Costing.
Contact Us now to discuss how TimeSheet Professional could provide Activity Based Costing or Deliverable Based Costing for your organisation.