PM syllabus

Public sector organizations use management accounting techniques like ABC costing to efficiently allocate funds, reduce spending, enable transparency, and improve customer service.

ABC calculates costs more accurately than traditional methods. It traces resource costs to activities and then products/services based on usage drivers, rather than averages.

Example: Hospital

Rather than an average cost per minute for the operating theatre, ABC would track:

• Preparation activity per operation

• Anaesthetist activity by operation type

• Anaesthetic drugs by patient time

• Physician time from incision to closure

• Itemised consumables via barcodes

• Overhead activities like admin and training

This granular, usage-based approach provides better cost control and insights than broad averages. However, ABC has high implementation costs which could reduce front-line service funding.