Co-Operative Bank Case

THE CO-OPERATIVE BANK: CASE ANALYSIS Q1: What new issues, if any, arise when applying digest to dish out business? Activity Based be (first principle) is a be method that defines a firms activities and then assigns cost or overheads base on those activities. For causa in the case, the activities of Co-operative money box as illustrated in show 5 argon providing automated teller services, issuing hindrance books, handling customer inquiries etc. and so cost incurred by each cost centre or resource pool are allocated on the basis if those activities. By applying activity based costing the bank was able to view the cost of an superfluous service such as fiscal advice services. To understand the issues border the application of ABC to service organizations, it is important to note the contravention between applying ABC to service organizations and manufacturing companies. Firstly, with a manufacturing company, the product costs stack be traced easily because a large plowshare of costs is attributable to direct confinement and materials used in the production process. However in a service organization, it is delicate to identify direct costs cerebrate to a proper(postnominal) service. This is because services are largely intangible asset and are directly delivered to customers through employees.

Therefore it follows that one mien in which the cost of providing a service can be captured, is by giving close estimates of the amount of time spend on delivering a particular service (Hartman, 1998). Despite these challenges ABC offers confused benefits to service organizations. For instance, ABC giv es upper management the energy to break up! the business based on individual products so that they can evaluate the profitability of each individual service. Furthermore, by identifying activities performed it gives cortical potential into the revenues earned per activity (Ashford, 2011). Basically the information provided accurately informs their purpose making and helps them evaluate areas for investment and areas for...If you want to make study a full essay, order it on our website: BestEssayCheap.com

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