This article discusses the selection of cost objects that enable an activity-based costing (ABC) system to provide meaningful information to those developing a coordinated operations and marketing strategy to enhance company profits. As a result of having supervised many MBA student team projects that used ABC to help create business plans for small businesses, the authors have developed some guidelines for selecting cost objects that provide information to suggest profit-enhancing actions by the business. Those guidelines are discussed and examples are provided from some of the more successful student projects conducted for small businesses.
Though constructed with different purposes, the theory of constraints and activity based costing systems pose a choice problem in respect of product mix decisions. We believe that the existing explanation of short versus long run criterion to explain firms' choice between these two systems is incomplete and offer an alternate explanation based on asset specificity. We argue that the extent to which specialized resources are deployed to make products in a mix determines the choice. We present a 2*2 matrix stating that when asset specificity is high, a firm is likely to choose ABC instead of TOC since ABC makes a large portion of costs visible to enable control. However, the choice is likely to be a TOC-ABC combination when the manufacture of asset specific products is also constrained by...
A study examines whether use of the strategic business initiatives activity-based costing (ABC), total quality management (TQM), and business process reengineering (BPR), are associated with improvement in financial performance. Top executives of 305 firms operating in the motor carrier industry furnished information regarding use of the initiatives. Dependent variable information is obtained from financial statement data filed with the US government. Multiple regression analysis is used to identify the improvement in ROA associated with the use of each initiative, and concurrent use of two initiatives. A simple effect for use of TQM and BPR is confirmed. Context-specific benefits obtained from concurrent use of ABC with BPR and TQM are identified. It appears that ABC functions as an en...
The competitive environment in the banking industry has made it very difficult to increase revenues and market share that is sufficient in growth and maximizing shareholder's wealth. The minimal growth in the area plus the over-saturation of banks, financial institutions and other sectors competing for the traditional banking products has forced banks to look at ways to control their costs to reach the profitability levels that are necessary to appease their stakeholders. The only way to control expenses is to have a better understanding of how certain products and how they are setup to contribute to the overall expenses in day to day operation of a bank. Activity-based costing will give bank managers a greater understanding of the true cost and profitability of all transactions in dail...
... should consider implementing an activitybased costing. Activity-Based Costing. The Activity-Base...
Activity-based costing (ABC) is a managerial costing tool that traces resource costs to activities and then assigns costs to products, services, customers and other cost objects in proportion to their use of the activities. Since ABC is not required for external financial reporting purposes, organizations should implement ABC only if the expected benefits are greater than the expected costs. This article discusses the results of a survey of 49 US cities with populations of 100,000 or more. The primary objectives of the survey were to determine if ABC is widely used, if ABC created new budget resources and if ABC is expected to create new budget resources. The goal of ABC is to enhance the mission of the local government. According to this survey of chief financial and accounting officer...
The main purpose of this research is to study the adoption of ABC as an overhead costing system among manufacturing organizations in Malaysia. The stages of adoption and seven factors expected3 to influence ABC adoption are derived from previous studies in similar research area. This study uses two methods of data collection, a survey and a case study. The study shows that 36 percent of the organizations are ABC adopters while the remaining 64 percent are non-adopters. The regression analysis performed on the data showed that three factors which are decision usefulness, organization support, and internal measures had significant influence on ABC while the other four factors namely cost, IT, training, and learning and growth were not found to be of any significant influence. A case study...
The production process is facilitated by implementing activity-based costing (ABC). Managers get to discover which activities are costing money and this knowledge makes them better able to control all costs more effectively instead of merely focusing on overhead costs. ABC's evolution into activity-based management has mandated that activities be classified into either value-added or non-value-added with managerial focus on the elimination of the non-value-added activities.
ver las páginas en versión mobile | web
ver las páginas en versión mobile | web
© Copyright 2012, vLex. All Rights Reserved.
Contents in vLex United States
Explore vLex
For Professionals
For Partners
Company
Other interesting searches:
Richard McCombie | section 1981 eeoc | Sonoco Products Company | law of the land definition | Tkc Communications, Llc | nacionalidad | Rungis | Fallo incongruente | demanda cumplimiento contrato | osservatorio giuridico
