Fundamentals of Activity Based Costing (Abc) in the Context of Project Management

Topics: Oracle Corporation, Oracle E-Business Suite, Cost Pages: 6 (1369 words) Published: July 24, 2012
Activity Based Costing

Table of Contents
Activity Based Costing (A-B-C).3
Oracle On Demand:4
Deployment Options:4
“Refresh” Activity5
Current Costing Practice:6
A-B-C Analysis:8
Suggested Cost Pool:10

The purpose of this project is to elaborate on the fundamentals of activity based costing (ABC) in the context of project management. The opportunity is to develop an integrated management system utilizing ABC concepts to plan, measure, and control costs that allow managers to focus on process performance and to make informed decisions along the product/service/project life cycle. We have tried to evaluate the current costing practice of a “Refresh” activity for various products offered as an Oracle On Demand service. Activity Based Costing (A-B-C).

Activity Based Costing 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: it assigns more indirect costs (overhead) into direct costs. In this way an organization can precisely estimate the cost of its individual products and services for the purposes of identifying and eliminating those which are unprofitable and lowering the prices of those which are overpriced. In a business organization, the ABC methodology assigns an organization's resource 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 and identification and measurement of process improvement initiatives. Oracle On Demand:

Oracle On Demand hosts and manages Hyperion Performance Management applications, keeping them available, secure, and up to date, thus allowing customers to better formulate their business goals and strategies, and communicate that information across the enterprise. Oracle On Demand delivers business applications and IT infrastructure—whether hosted in Oracle’s data center or that of a trusted partner.

Deployment Options:
SaaS: Oracle CRM
Hosted and Managed Application:
a.Oracle E-Business Suite On Demand
b.PeopleSoft Enterprise On Demand
c.JD Edwards EnterpriseOne On Demand
d.JD Edwards World On Demand
e.Oracle Hyperion On Demand
f.Oracle Technology On Demand
g.Oracle On Demand for Siebel CRM
h.On Demand for Business Intelligence
i.Oracle SaaS Platform On Demand
j.On Demand for U.S. Federal Government
k.Oracle Markdown Optimization On Demand
l.Oracle Transportation Management On Demand
m.Oracle Beehive On Demand
“Refresh” Activity
Upon customer’s request, Oracle will reload an image copy of customer’s Oracle E-Business Suite (and other On Demand offerings) database and application files and make appropriate configuration changes to facilitate use of such files (a “refresh”) once per week per customer during the implementation phase of the Computer and Administration Services and once per month after the customer begins using the Oracle E-Business Suite programs to process “live” or production data in the services environment. Oracle will endeavor to commence customer requested refreshes within 72 hours of the request. Once the coordinated refresh event window commences, a refresh where the target environment has one DB node and one MT node - where the refresh is performed using a backup from disk (or tape) may take up to 48 hours to complete. Refreshes for other types of environments such as those with multi-node Oracle Real Application Clusters, multiple middle tiers, Oracle Express Server may take up to 55 hours to complete. Refreshes from an existing environment to a new environment may take up to five calendar days (120 Hrs) to complete once the refresh event window commences. This team consists of Refresh specialist who does the...
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