The following extract is taken from a website on which the UK government explains how actvitybased costing can help estimate the costs of providing a police service.

Activity-based costing (ABC) is a widely used costing system that seeks to place an accurate cost on what an organisation produces. In policing, the ABC model has been developed to calculate the costs of policing activities – thus enabling managers to continuously improve policing services.

ABC is essentially a local management tool that focuses on the Basic Command Unit (BCU) and looks at the total cost of policing a given geographical area. It includes all policing services delivered by BCU staff, as well as contributions from headquarters operational or organisational support units.

This enables comparisons to be made over time across police forces and between BCUs, and provides managers with a suite of information on Best Value processes.

The benefits of ABC are that it:

enables BCU Commanders to make better use of their resources;

enables Police Authorities and forces to identify how resources are being used and to make efficiency improvements, where necessary;

empowers police forces to justify additional resources by presenting their current resource usage accurately and transparently;

increases accountability and identifies gaps between resource usage and priorities – thus allowing better comparison between forces.

Questions

1 Why is it important to know the overhead costs of different types of police activity?
2 What types of overhead might be found in different types of police activity?