8INTEGRATED ACTIVITY-BASED COSTING WITH MARKET SEGMENT ANALYSIS

Chapter 4 provided a brief overview of the profitability analysis capabilities supported by CO. As stated earlier, CO-PA supports two methods of market segment analysis: (1) account based and (2) costing based. Costing-based analysis is used to support a sales and marketing view; account-based analysis focuses on reconciliation with financial accounting. As the focus here is segment analysis, the costing-based, marketing view is the CO-PA method used for all examples within this chapter.

The profitability analysis module provides the organization with multidimensional planning and analysis of profits, enabling managers to view profitability in terms of many analytical views as well as intersections of these dimensional views. Dimensional views may include a customer dimension, a product dimension, and/or many other user-defined dimensions. These views enable managers to analyze market segments and the profit/loss data in a meaningful and relevant perspective. This multidimensional functionality is a powerful tool, which only increases with the accommodation and integration of ABC. Activity-Based Costing is simply a more accurate assignment of product and overhead costs via processes. By integrating ABC data, cost assignments to multidimensional analysis provide a better picture of which market segments are providing the company with the most benefit.

MULTIDIMENSIONAL ANALYSIS CAPABILITIES

By now, the meaning of ...

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