Activity Based Costing - Case Study

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  • Topic: Industrial gas, Costs, The Linde Group
  • Pages : 8 (1973 words )
  • Download(s) : 331
  • Published : April 15, 2012
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Table of Contents

Page

Declaration

Abstract3

Introduction4

Method Of Costing5

What drive them to use that method6

Short Term Strategy7

Long Term Strategy8

Future Plans9

Important Issues10

Conclusion11

Bibliography12

Declaration

We declare that this assignment is result of our own hard work, understanding and research based on activities of BOC Gases Fiji Limited and the notes received during our course.

_________________

ABSTRACT

BOC (FIJI) LIMITED

BOC (Fiji) is a member of the Linde Group, a leading global gases and engineering company, which serves customers in more than 50 countries. Many people come in contact with BOC Fiji every day, because our products and services touch almost every area of business and domestic life. BOC services the industrial market with gases, safety and welding equipment. Our diverse range also supplies medical and beverage gases and equipment.

BOC Fiji was established in 1965 and employs over 45 staff with retail outlets in Suva, Lautoka and Labasa. BOC Fiji also has a net work of Gas Agents ensuring product availability around the country.

Central to our success is our commitment to the values of Safety, integrity, sustainability and respect. We have a passion to excel, innovate for customers, empower people, and to thrive through diversity.

BOC in the South Pacific provides welding, safety equipment and gas products to the manufacturing, scientific, hospitality, medical, agriculture and refrigeration industries.

As safety is the culture reinforced by BOC employees, this area of expertise is especially valued by our customers. The local BOC Fiji sales team is backed up by dedicated product managers in Australia.

As a leading manufacturer, we understand the importance of maintaining a safe working environment for our employees. Safety is part of our culture.

INTRODUCTION

Activity analysis and Management (ABC)

Activity – Based Costing (ABC) is a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each, i.e it assigns more indirect costs (overhead) into direct costs.

In this way, an organization can precisely estimate the cost of individual products and services so they can identify and eliminate those that are unprofitable and lower the prices of those that are overpriced.

In a business organization, the ABC methodology assigns an organization resources costs through activities to the products and services provided to its customers. It is generally used as a tool for understanding product and customer cost and profitability. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing, identification and measurement of process improvement initiatives.

BOC is a manufacturing, wholesale and retail company. Its operation deals with manufacturing, whole sales distribution and retailing to individual customers. The three different levels of business give more complexity to be appreciated rather than just choosing a single process lines firm. It is an international company and maintains its high standard and as I am employed by BOC I am able to apply my theoretical knowledge to this company than any other as I know a fair bit of background information about operation, distribution and service which will make me more efficient in building this project.

Method of costing is used

BOC uses the average costing.

Under the average-cost method, it is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period. Average cost is computed by dividing the total cost of goods available for sale by the total units...
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