Activity based costing with capital analysis

Capital analysis in ABC FOCUS is a Gold version feature. All indirect costs pass via cost pools to the cost objects. Capital investment is another cost that relates to Cost pools ie the path for invested capital begins at the cost pool. Significant equipment purchases require a capital outlay via the cost of capital. This is a cost associated with one or more cost pools from where it is allocated to cost objects or processes in the usual activity based costing steps.

Based on the Cost of Capital entered these investment costs are tracked from the pools to cost objects and processes. If capital has been invested in a pool, analysis of the cost of a cost object or processes associated with that cost pool will include the capital analysis of investments attributed to the pool. For example the costing for the primary cost “Assisting doctors” above shows the capital charge contribution to the costs.

ABC Focus can go beyond the operating costs to include cost of capital for investments. This facility allows for the capital analysis of the cost objects and processes from the perspective of capital invested in the these cost pools.