Operating Expense Budgeting Using Standard Activity Measurement Plan

Abstract

This paper is about an implementation framework of Standard Activity Measurement Plan (StAMP) in Operating Expenses (OPEX) budgeting. StAMP is a modified version of Activity-Based Costing (ABC). Activities are given predefined unit costs based on the direct costs of each cost center. The basis of the unit costs is the previous year's actual expenses. The direct expenses are spread to all activities. The cost center will have to define the activity driver or the mechanism to accomplish the work or activity output. If the cost center can identity the volume or frequency of the activity driver for a given period (such as annual or one quarter of a year), the expected costs can be computed. This can be a basis for the budget as well which is linked to the goals/objectives/activities of the cost center.Another feature of the StAMP is the Full-Time Equivalent (FTE) analysis. Since the processing time per activity will be initially identified, simply multiply the activity driver volume to the total time per activity to establish the FTE per activity or total FTE per cost center. This can be used for manpower planning and performance measurement as well.