ABM and the procurement cost model

Article Abstract:

The Material Control Dept. of Parker Hannifin's Compumotor Division decided to introduce activity-based management (ABM) to its organization. This undertaking involved the formation of a team consisting of six buyers or planners, the department manager, the manufacturing financial analyst and accounting manager. Through the ABM initiative, management hoped to further improve the just-in-time environment, add a 'design for manufacturability' philosophy into engineering that also achieves concurrent engineering goals, and enhance customer satisfaction. The ABM initiative involved the identification and classification of the activities performed as either value-added or nonvalue-added, quantification and interpretation of the total cost of dealing with individual suppliers, enhancement of assignment of indirect procurement costs to our products, and communication of material procurement cost to engineering.

Telephone and telegraph apparatus, Electromechanical Switching Eqp, Management, Industrial equipment and supplies industry, Industrial equipment industry, Purchasing departments, Parker Hannifin Corp. Compumotor Div.

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The cost allocation problem in a telecommunications company

Article Abstract:

Indirect costs commonly tied to two or more costing units contribute to the problem of cost allocation in the telecommunications industry. Costs incurred by such firms may be classified as nontraffic sensitive (NTS) or traffic sensitive (TS). NTS costs do not change with traffic volume, resulting in a fixed cost behavior pattern. TS costs relate directly to the number of messages or volume of traffic handled by a network. The FCC took a position after the breakup of the Bell System that NTS cost recovery from toll service has historically been too high. NTS cost allocation bases have been codified by the FCC in its 'Separations Manual'. High-volume customers have been able to cut their contribution to local exchange firms by providing their own local connections, providing private line service, or exercising other cost-saving options.

Economic aspects, Telecommunications systems, Deregulation, Resource allocation

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Telecommunications costs: how to identify, analyze, and control them

Article Abstract:

Methods of identifying and controlling telecommunication costs are discussed. Some of the less obvious costs involved in operating a telecommunications system include long-distance costs, technical training, and continuing education to keep up with technological advances. Methods for controlling telecommunication costs include call accounting systems, restricted access, least-cost routing, manual review of telephone invoices, and establishing policies and procedures for use of telecommunications equipment.

Methods, Accounting and auditing, Managerial accounting, Cost control

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