Using activity-based costing for efficiency and quality.
Government Finance Review › Vol. 9 Nbr. 3, June 1993
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Summary
The City of Indianapolis determined the cost of providing a particular social service to its constituents by hiring a consultant to apply activity-based costing (ABC) to evaluate these programs. The process enabled city officials to prioritize services according to the departments which could most efficiently deliver them. The ABC method was able to pinpoint specific costs for specific activities. The application of the ABC method allowed the city of Indianapolis to evaluate the actual value of the service dollar as well as the quality of the service rendered.
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Using activity-based costing for efficiency and quality.
Applying activity-based costing analysis was a necessary first step in deciding on which services the City of Indianapolis wanted to or should provide to the citizens and in defining core vs. ancillary activities.
When the new mayor of Indianapolis took office in 1992, he was faced with a situation unique to most mayors of large cities: a city with an excellent credit rating and a solid reputation for having its financial house in order. Yet he was amazed at what city officials did not know about their budgets. They knew that the city took in more money than it spent but did not know how much any single activity cost....See the full content of this document
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