Estimating the cost performance metrics of the service level agreements between shared services centers and profit centers of a private electric distribution utility using the activity-based costing as a management tool

• Main Author: Manalo, Romeo Galang
• Format: text
• Language: English
• Published: Animo Repository 2009
• Subjects: Cost; Shared services (Management); Cost centers (Accounting); Service-level agreements; Activity-based costing; Electric power distribution; Business
• Online Access: https://animorepository.dlsu.edu.ph/etd_doctoral/265; https://animorepository.dlsu.edu.ph/context/etd_doctoral/article/1264/viewcontent/CDTG004613_P.pdf
• Institution: De La Salle University

This paper addresses an important issue the nature of and evidence for success in the transfer costing of internal services or shared services or products within a company. The case of activity-based costing (ABC) is used to explore how the proponent has developed a framework linking Quality, Cost and Delivery (QCD) components of products and services. The QCD performance indices, which are the natural properties of products and services, will form part of the Service Level Agreements between the internal service providers (Shared Services Centers) and internal customers (Profit Centers) of the company. This framework optimizes the use of overhead expenses to the end products of the company. This paper also discusses the various cost components of the products and services using the full absorption costing principle. It is a revolutionary idea in the sense that all activity costs are considered variable costs and product costs came from activity costs using various cost drivers. The Principal Component Analysis (PCA), the multi-variate statistical tool, is applied using SPSS to analyze which independent variables contribute significantly to the Product Unit Price (PUP) and which should be given more emphasis in decision making process.