A calculation to determine the cost of activities by considering the order of tasks and time it takes to complete each task.
How Activity Sequence-Sensitive Works
Activity sequence-sensitive (ASS) is a cost accounting term referring to how the progression of repetitive tasks affects the productivity of a process. It is a calculation to determine the costs of activities based on how a worker accomplishes a task and the time it takes to complete each task. It is commonly used in manufacturing to determine how to create an end product effectively.
Companies will also use activity sequence-sensitive calculations for determining the workflow of a variety of project types. A project manager will usually create a network diagram to map out the activities required to finish a project and identify the order of activities to achieve task objectives. For example, the following must be determined in a specific order when launching an email campaign in marketing:
- Target audience
- How to acquire a list of emails
- Campaign goals
- Written content, including the call to action
- Images and graphics
- Email generation
- Analytics of click-through rates
Examples Of Activity Sequence-Sensitive
To use an activity sequence-sensitive analysis for a manufacturing process, you would determine which components to assemble first. For example, when building an electric car, you can put the chassis together before installing the battery block sets. Then add the steering or power system before the paint, tire, or windshield wipers. However, an analysis can show that mounting the battery before putting the chassis together can allow you to adjust the car's balance in the early stages of production and save hours of costly fine-tuning later.
The garment industry also has a sequence of activities that companies follow when manufacturing clothes. For example, a technical designer must create a pattern for how the fabric will be cut and assembled. This step must occur first and done accurately to prevent mistakes later in the manufacturing process. Workers will then lay out the pattern on the prepared fabric and use a marking process to identify the size and position of each component before starting the cutting.
Designs that workers will add to the garment, such as screen printing or embroidery, must occur before sewing all the fabrics together. It can be harder and costly to add designs once the garment is in its final form, i.e., a shirt.
Significance Of Activity Sequence-Sensitive
Using an activity sequence-sensitive to calculate costs in creating a product or completing a project can increase productivity and make the process more cost-effective. It is an effective method to determine what is the easiest order of activities to accomplish tasks. These cost accounting methods are also important for companies to consider because it is crucial for preparing budgets and completing a profitability analysis.
History Of Activity Sequence-Sensitive
The concept of minimizing costs through the sequence of activities was first defined in detail in a 1987 book under activity-based costing. Robert S. Kaplan and W. Bruns wrote the book, "Accounting and Management: A Field Study Perspective," which focused on the manufacturing industry and how technology and productivity improvements impacted costs.
In 1999, Peter F. Drucker later explained activity-based costing in the book Management Challenges of the 21st Century. He explained that this method records costs that traditional cost accounting doesn't because it focuses on what it costs to do something. In other words, it considers the time it takes to accomplish a task. Today, recognizing the costs to do something and the sequence of how to do them to minimize total costs is used for most manufacturing and management of projects.