In defense of activity-based cost management
Article Abstract:
An activity-based cost (ABC) model is a management system that can generate information needed by organizations to better understand the economics of their operations, whether in the past, at present or in the future. ABC systems provide support for the implementation of a company's customer-satisfaction and operational improvement programs and demonstrate how these programs are related to increased profitability. In pursuing total customer satisfaction, an ABC model provide management with information about customer needs that are economically feasible to meet and those that are not. This information can mean the difference between an organization's survival and bankruptcy. However, although ABC systems generate important economic information, management must not rely solely on them for the company's competitiveness. Managers must learn to combine ABC data with information obtained from other sources.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1992
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How cost accounting distorts product costs
Article Abstract:
Disagreement persists about whether product costs should be assessed by using full or variable costs. Academic accountants and economists have argued that variable costs are most relevant in product decision-making, arguing that the highest profits can be gained by setting marginal revenues equal to marginal costs. Accountants in practice report full costs in their cost accounting systems. It is suggested that a comprehensive product cost system that incorporates long-term, variable marketing and manufacturing costs for each product or product line be the basis for management decisions in introduction, price, continuance, or re-engineering of product lines. The experience of 20 major companies such as Schrader Bellows is examined to gain insights into how product costs can be systematically distorted.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1988
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From ABC to ABM
Article Abstract:
A study was conducted examining the use of activity-based accounting in five manufacturing firms, one financial services organization, one distributor, and the finance department of a major energy company. The experiences of these eight organizations revealed that ABC management is not just a system, but a process that is useful in managing business activities and processes. It was also shown that ABC management can be utilized in strategic as well as operational decision-making. Furthermore, research results indicated that there is no problem using ABC models in conjunction with traditional financial systems. Finally, it was shown that companies cannot rely on ABC information alone in increasing profitability and enhacing operating performance.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1992
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