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T2 2020 - HI5017
Managerial Accounting
Student Name: Vichet
Abstract
This discussion is on the analysis and the implementation of ABC Costing in UPS and Ford Motors. ABC costing is one of the finest and multifarious and time taking cost management method to lessen the rising costs of the company. They give precise results which helps the companies like UPS and Ford Motors to preserve their supply chain management economically, at a lower cost and devoid of any delay. UPS is an American multinational parcel delivery company and is a challenger of Fed-Ex. We will scrutinize the ABC Costing model designed of UPS, the strategies used to diminish the costs and the methodologies used to execute a well integrated transportation and delivery management system. Almost 75% -80% of the US companies uses traditional method of costing while only 25% - 20% who tried to implement ABC Costing endured for long term. This was due to its complexity and as stated by Sharman (2003) that the management accountant and Board should adapt to the ever changing business environment and deliver various updates and information to the managers to enable and achieve business performance.
Table of contents
Introduction…………………………………………………………………..Pg 1
Analysis……………………………………………………………………….Pg 2 to 9
(i) Part A……………………………………………………………...Pg 2 to 4
(ii) Part B………………………………………………………............Pg 5 to 9
Conclusion……………………………………………………………………...Pg 9 to 10
References………………………………………………………………………Pg 10 to 11

Introduction
Activity Based costing is the most excellent costing methods used by several organizations to achieve just in time approach and lean management techniques. This method helps to identify the explicit activities for which the cost needs to cut and send the cost to that particular activity. It also helps to recognize the drivers of cost or a particular transaction which push the costs to be expended. It also helps to calculate the cost rate per cost driver and finally support to assign the costs to the individual products and multiply it with the cost drivers of units consumed by the products. Thus, it has helped many organizations to shrivel the cost by either controlling the cost or by minimizing the cost. This ultimately helped to earn productivity. In this discussion we will discuss of the ABC Costing implementation in two companies i.e. Ford and UPS. Both are American companies and we will discuss more ornately on UPS ABC costing system.
Analysis
Part A
Briefly discuss the features of your chosen costing system
There are various characteristics of ABC Costing. ABC costing is also
anded as Activity Based Costing and is used to apportion the indirect costs to the diverse managerial products. ABC costing features is complex as per Robert Jinkens (2010) and is time consuming but sends exact results. This costing system provides a more accurate and distinct
eakdown of the indirect costs. Installation and execution of ABC Costing in small and medium sized organization may be expensive and time consuming. For advanced companies it is easier to execute as they have the resources necessary to implement such cost controlling mechanism and the benefits would be achieved on a generously proportioned scale. ABC Costing is prefe
ed and suggested by almost all CFO’s of the organization for its long term benefits. It is a prerequisite for setting up the re-engineering functions and augmentation of the business dispensation system. It is used by the business companies which are more dependent on system and system performance. It actually splits or segregates the various processes to execute an activity into several numbers of activities so that the cost gained can be appraised, scrutinized and restricted at these separate action points. Mannu Arora (2017)
Identify 2 specific Australian companies that your chosen costing system is suitable for, and explain why
The two specific corporations where the ABC Costing is applied are Ford Motors and UPS (United Parcel Services). While UPS is an America multinational parcel delivery and supply chain Management Company, Ford Motors is an American car manufacturer and is headquartered in Dea
orn, Michigan. Ford Motors implemented the ABC Costing in their company so that they can spotlight on creating superior value from the structure and processes. With the support of diminutive investigation and test of each and every step before its implementation that ABC Costing was considered as a part of Fords system. During this process, the steps which did not created worth were discarded. Therefore, it was the well conversant resolutions which were made accessible to the management so that they can certify that they can remain in the rivalry and become the leader in the car industry. On the other hand, the implementation of ABC Costing in UPS Company ascertains the collaboration and integration the operating behaviour of the company with the product and the customer segment cost. It was also used to decide and evaluate the price of the product both new and existing of UPS. Finally, it was refu
ishment of the cost reporting system by providing a steady and authentic outcome based on products and services. Therefore, it can be assured that the execution of the ABC Costing in both Ford Motors and UPS was helpful for the long term expansion and prediction of the company. It helped them to recognize the explicit areas where there was want of...