Dil Bhi Hassen Chauiaa

Activity Based Costing in the Telecom Industry

Activity Based Costing

in the Telecom Industry

28 February 2002 Presented by:

Introduction -- What ABC is not• not• What is Activity Based Costing: ! As defined by Kaplan & Cooper in 1991 ! Difference between ABC and Traditional Accounting ! The CAM-I Standard and business modeling ABC in the Regulatory Environment: ! FDC, LRAIC versus ABC ABC in Government: ! Cost Recovery, Cost Management, Process Improvement and Outcome/Output Analysis ABC in the Telecom Industry: ! Predictive Resource Planning, Profitability Analysis, Costing and Cost Management Who are using ABC

©2000 All rights reserved. ABC Technologies, Inc. Slide 2

Financial Accounting versus ABC

Expenditure is not the same as cost

“There are many ways to arrive at “cost” as well as revenue as the Enron scandal has so vividly illustrated. For an accountant, “cost” can be any outflow of value … for an economist, a “cost” only arises from a a real cause.” John Ure

ABC practitioners and economists think alike …

©2000 All rights reserved. ABC Technologies, Inc. Slide 3

•Costs and expenses equal in total. But they are not the same thing. •Expenditures are incurred when money is exchanged between parties. Costs are always calculated, restated and then assigned to products and services. •ABC resolves the arbitrary “Cost Absorption” in traditional accounting

©2000 All rights reserved. ABC Technologies, Inc.

Slide 4

ABC is not ...

Activity Based Costing in the Telecom Industry

Introduction -- What ABC is not• not• What is Activity Based Costing: ! As defined by Kaplan & Cooper in 1991 ! Difference between ABC and Traditional Accounting ! The CAM-I Standard and business modeling ABC in the Regulatory Environment: ! FDC, LRAIC versus ABC ABC in Government: ! Cost Recovery, Cost Management, Process Improvement and Outcome/Output Analysis ABC in the Telecom Industry: ! Predictive Resource Planning, Profitability Analysis, Costing and...