Activity-Based Costing System
Kabam Games undergoes multiple projects concurrently, with some in commercial stages and others under development. To optimize strategic decisions, executives needed a robust method to fully assess the total profitability (or cost) of each project by accurately allocating indirect expenses. As the project lead, Sven was responsible for designing and implementing an activity-based cost allocation system that would provide a clear picture of each project's financial performance by fully distributing indirect costs.
Sven initiated the project by conducting a thorough analysis of indirect costs, which led to the creation of cost pools based on distinct cost drivers. He utilized existing data points to ensure accurate and efficient systemization of cost allocation. To ensure buy-in and refine the system, he engaged with product P&L owners and business unit leaders, presenting the system’s objectives and soliciting feedback to address any concerns.
The new cost allocation system successfully highlighted several areas of cost inefficiency that had previously gone unnoticed. For instance, the system revealed excessive facility expenses associated with one product, leading to the discovery of underutilized studio space and the subsequent subleasing of the area. Additionally, it identified discrepancies in the marketing costs attributed to a smaller product, revealing over-reported direct marketing expenses. These insights enabled the company to make informed decisions to enhance profitability and resource utilization.
EXPERTISE
Management accounting
Business analysis
Change management
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