ABC: why it's tried and how it succeeds

Article Abstract:

The adoption and eventual success of activity-based costing (ABC) depend on a number of factors. According to a survey by the Institute of Management Accountants, the adoption of ABC by organizations is influenced by the potential for cost distortions, usefulness of cost information in decision making, lack of system initiatives and organizational size and scope. On the other hand, most companies attribute the success of their ABC initiatives to time, other major management methods, information technology improvements, top management support, integration of ABC into the budgeting process and use of ABC cost information in financial reporting. The survey also revealed that adoption of ABC is increasing among utilities, financial, nonprofit and other service organizations. Moreover, majority of these organizations are using ABC for decision making in functions other than accounting.

Cost Control Techniques, Cost Accounting, Cover Story, Cost control, Institute of Management Accountants

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Do non-profits use management accounting properly?

Article Abstract:

A survey was conducted to investigate the perceptions of non-profit organization managers regarding the use of management accounting information strategies and procedures within their organizations. This study involved 24 executive directors, program directors and chief accounting officers from six Pennsylvania-based community mental health and mental retardation centers. These administrators were asked to rate management accounting information practices on a seven-point scale as regards to their use. Results of the study revealed that the management accounting function of identifying cost by behavior was perceived to be the most deficient, while the use of cost centers and accrual accounting information was seen to be the most effective. The use of cost centers was also rated as most important, while the use of capital budgeting methods was perceived to be least in importance.

Admin. of public health programs, Accounting and auditing, Beliefs, opinions and attitudes, Executives, Accountants, Nonprofit organizations, Psychiatric facilities

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