Cost allocation for reporting complete product profitability through Activity-Based Costing
Kabam Games managed multiple projects simultaneously, ranging from commercial products to those in development. Executives needed a complete view of total profitability or cost for each project, requiring a robust method to accurately allocate indirect expenses. To meet this need, Sven led the design and implementation of an activity-based cost allocation system that would provide a detailed picture of each project's financial performance by fully distributing indirect costs.
Sven began by analyzing the company’s indirect costs, creating cost pools based on distinct cost drivers. Sourcing data from disparate systems, he systemized the allocation logic to ensure accuracy and efficiency. To refine the system and secure buy-in, he engaged product P&L owners and business unit leaders, presenting the objectives and gathering feedback to address concerns and improve alignment.
The new cost allocation system uncovered areas of inefficiency that had previously gone unnoticed. It highlighted excessive facility expenses tied to one product, resulting in subleasing underutilized studio space. It also revealed discrepancies in marketing costs for a smaller product, leading to enhanced accountability for marketing programs. These insights allowed the company to enhance profitability, optimize resource utilization, and make more informed strategic decisions, demonstrating the impact of Finance BI on cost management and operational efficiency.
EXPERTISE
Management accounting
Business analysis
Change management
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