An Example Of An Activity Based Costing System
December 8th, 1971 | 
Author: An Example Of An Activity Based Costing System
In 1996 Humberside police had over 3000 police officers and civilians on the payroll they recognised the great importance attached to activity analysis and activity based costing which would enable them to efficiently manage resources in tackling crime. Seeing as activity based costing is entirely dependent on the activity analysis data the quality and accuracy of the data collected is essential to the new business processes.
Activity Based Costing
Firstly activity based costing is a costing model that takes into account activities within an organisation and breaks each activity down into its individual parts to determine its cost in resources and enables any activity to be measured in the amount of resources it takes to complete. This business process allows managers to make more informed decisions which benefits the company in planning evaluating and productivity.
The Solution
The idea that was put forward to incorporate an activity based costing process was based around activity cards to track the daily work load and efficiency of individuals within the Humberside Police Force. Firstly a performance development unit was set up they produce instruction booklets and train liaison officers at each division within the Humberside police these divisional officers in turn train Sergeants in completing the activity cards. These activity cards are then incorporated into the system by scanning the completed forms into computers or imputing the form in electronic documents from pocket PC’s. This system enables an all in one data capture solution you can design print scan and evaluate the activity cards and then use this data within the activity analysis models and throw it back into the activity based costing system. The collected data is used in conjunction with demand and performance statistics which provide divisional commanders and officers with the data required to evaluate the efficiency and effectiveness of the entire system and so work out more efficient ways of using their resources. This activity based costing exercise is carried out annually in order to give a relatively up to date account of the system but still not draw away resources from the operation that it is trying to help. The adaptability of the data collection system is essential in any moving or changing business a built in audit trails can track changes to the collected data during processing which gives the user the opportunity to keep as up to date as possible with the collected audits. The new tool has enabled Humberside police officers to spend more time in front line policing efforts and with a lesser emphasis on less productive tasks such as paperwork which once again helps with the use of resources within the system.
Some of the main benefits are that it provides an all in one data capture system a fast accurate processing of activity cards and it has a built in audit trail facility enabling new data to be incorporated instantaneously into the activity based costing model. But overall it enables officers to intimately understand the deployment of resources within the policing system and gives the opportunity to evaluate these resources and deploy these according to the needs of the user.
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