Page 255 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes Another classification is product activity. This activity is totally different from the yester

classifi cations, which plays a pivotal role in the industry in catering the needs and demands of
the customers and consumers. Product activity is predominantly used by the car, truck, 3-wheeler
manufacturing companies. The products are produced only to the tune of taste and preferences
of the consumers.
Now we can concentrate on the service industry. It could be discussed with the help of insurance,
share broking industry in order to know about the primary activities in detail.

Figure 14.6
Number of application
per policy
Processing the application to
Unit Activity

the tune of prospective policy
holders Number of applications per
hour
Processing the application to the
tune of risk category Number of application per
of the investors, by portfolio investment
managers

Number of applications per hour

Batch activity is being carried out in the service industry as follows:

Figure 14.7

Each type of insurance policy
Batch Activity applications are accumulated and Number of batches per

processed policy, per month

Service activity is being carried out in the insurance, banking industries as follows:
Figure 14.8

Designing a structure of Per policy per hrs
Service Industry premium

Designing a structure of Per category per hrs
EMI

The next segment is nothing but the secondary activity to the cost object. The secondary activity

may be classified into two general categories viz support activities of the core activities and
non-support activities. The human resource department is the only department which mainly
extends support to the core activities of manufacturing i.e. primary activity.
Some of the support activities never go in line with the primary activities of the business fi rm.

Did u know? What are the non-support activities?

The activities of the office of the corporate entities are to maintain the relationship with the
investors and with the legal framework, known as non-support activities.

250 LOVELY PROFESSIONAL UNIVERSITY