This course is taught in English and simultaneously translated in French.
The ability to quantify the costs of an MFI's activities provides a powerful tool for understanding and managing costs. Activity Based Costing (ABC) allows MFIs to cost their individual products to determine whether they are viable. Better management information on products helps managers make key decisions about product design, delivery mechanisms, and pricing. ABC is also used to cost activities and processes which will lead to a greater understanding of how and why costs are incurred.
Unit costs of each activity (i.e. loan processing per application, opening a savings account per client) can be traced over time to monitor the effectiveness of streamlining measures. The implementation of this tool can also be expanded to provide costing of branches, including unit costs of individual activities at the branch level. This information can be then used by management to benchmark performance between branches. Costing is a potent tool for identifying opportunities to improve business process effectiveness and efficiency. This course will give managers the ability to implement the ABC tool in their own institutions. It is based on CGAP’s costing tool and accompanying excel spreadsheet.
Objectives:
Methodology
A combination of lecture, discussion, group work and case studies are used to go through the process of activity based costing. Time and facilities permitting, the excel based spreadsheet for activity based costing will also be introduced.
Day 1: Introduction to Costing Terms, the process of costing and allocation based product costing.
Day 2: Design of activities dictionary, conducting staff interviews and constructing cost per activity.
Day 3: Selection of drivers, and completing cost per product.
Day 4: Viability of product and further analysis focusing on efficiency and productivity, using cases.
Day 5: Using the excel based spreadsheet.
