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Activity-Based Management for Financial Institutions: by Brent J. Bahnub, Gary Cokins

By Brent J. Bahnub, Gary Cokins

Discover the right way to use activity-based administration to enhance your backside line

The first booklet of its variety to target activity-based administration within the monetary prone undefined, Activity-Based administration for monetary associations: riding final analysis Results will assist you to force adjustments in your organization's backside line.

After delivering a quick evaluate of a monetary providers activity-based costing version, this publication makes a speciality of easy methods to without delay increase web source of revenue, masking crucial themes together with costing, chargeback, and pricing; imposing ABC; imposing ABM; coping with organizational swap; and warding off pitfalls.

  • Written for these within the monetary companies industry-banks, securities enterprises, assurance companies
  • Reveals tips on how to force advantages to the base line via disciplined execution of activity-based administration and organizational switch management
  • Provides actual international examples and instruments for fast effects and sustained success

This unique ebook will take your bank from caught to financially winning, riding profitability and performance.

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Extra info for Activity-Based Management for Financial Institutions: Driving Bottom-Line Results (Wiley and SAS Business Series)

Example text

4. In Step 1 of the above example, HR assigns $400 using ABC to IT ($100) and Operations ($300), leaving $1,600 unassigned. 4 Reciprocal Costing $2,000 using ABC to HR ($500) and Operations ($1,500), leaving $5,000 unassigned. Similarly, Operations assigns $100 using ABC to HR ($75) and IT ($25), leaving $4,900 unassigned. In Step 2, using ABC, each of the shared services assigns the ‘‘new’’ total to the Front Office or directly to cost objects. For example, Operations originally had $5,000 to assign, but based on usage of HR and IT resources, Operations needs to assign $6,700 via its activities to the Front Office and cost objects.

Most of the time, while executive management may be compensated on LOB or regional performance, the distinction is fairly artificial. The profitability of the Colorado region of the Wholesale Banking LOB cannot be discussed without an understanding of the composition of the products and customers that make up this region/LOB combination. Since you do not plan to sell a ‘‘Colorado region of the Wholesale Bank,’’ the profitability of the entity is irrelevant. What if one of the most profitable customers moves to another region?

HR assigns $100 to IT, $300 to Operations, and $1,600 to the Front Office, based on activity drivers for the variety of activities performed by HR. Notice this is not a ‘‘peanut butter’’ allocation of pre-ABC costs based on a single driver (headcount). The next step in the waterfall costing approach is to assign all of the IT costs (including the $100 assigned from HR) to the remaining ‘‘downstream’’ functions, based on ABC. 3 Waterfall Costing Operations ($2,050) and the Front Office ($5,050).

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