Costing

Distribution by Scientific Domains
Distribution within Business, Economics, Finance and Accounting

Kinds of Costing

  • product costing
  • target costing


  • Selected Abstracts


    The Measurement of Success of Activity-Based Costing and Its Determinants: A Study within Canadian Federal Government Organizations,/L'évaluation Du Succès De La Comptabilité Par Activités Et Ses Déterminants: Étude D'Organismes Du Gouvernement Fédéral Du Canada

    ACCOUNTING PERSPECTIVES, Issue 3 2007
    Anne Fortin
    ABSTRACT This research first measures the success of activity-based costing (ABC) implementation within Canadian federal government organizations along five constructs, which are the use and frequency of use of the ABC information, decision actions taken, financial improvements, evaluation by management as to overall success, and a composite measure of the four constructs. Second, it identifies the determinants of ABC success. The success determinants used in this study are organizational culture, involvement of a champion, change process, commitment, controls, and continuous education. Measures of ABC success and determinants were obtained using a survey of managers who have participated in ABC implementation in Canadian federal government organizations. The study found that the benefits derived from ABC implementation within Canadian public sector organizations do not measure up to the efforts invested, although respondents consider that some financial improvements have resulted from the implementations. Controls and culture proved to be the two variables that significantly relate to ABC success. The results could have implications for policymaking organizations such as the Treasury Board Secretariat of Canada and the Office of the Comptroller General (OCG). The latter should question the benefits of investments made in management accounting best practices in the federal government. The OCG could also direct departments and agencies to the right environment (success determinants) to be put in place in order to ensure the success of ABC initiatives. RÉSUMÉ Les auteurs évaluent le succès de la mise en ,uvre de la comptabilité par activités (CPA) au sein d'organismes du gouvernement fédéral du Canada selon cinq paramètres, soit l'utilisation et la fréquence d'utilisation de l'information produite par la CPA, les mesures décisionnelles prises, les améliorations financières, l'évaluation du succès global par la direction et une mesure composite regroupant ces quatre paramètres. Ils définissent ensuite les déterminants du succès de la CPA. Les déterminants utilisés dans la présente étude sont la culture organisationnelle, l'intervention d'un défenseur, le processus de changement, l'engagement, les contrôles et la formation continue. Les auteurs obtiennent les critères d'évaluation et les déterminants du succès de la CPA en procédant à un sondage auprès de cadres ayant participé à la mise en ,uvre de la CPA dans des organismes du gouvernement fédéral du Canada. Ils constatent que les avantages découlant de cet exercice au sein des organismes du secteur public canadien ne sont pas à la hauteur des efforts investis, même si les répondants estiment en avoir tiré certaines améliorations financières. Il semble que les variables des contrôles et de la culture soient celles qui se rattachent de façon significative au succès de la CPA. Les résultats de l'étude pourraient avoir des conséquences pour les organismes responsables de l'élaboration des politiques comme le Secrétariat du Conseil du Trésor du Canada et le Bureau du contrôleur général (BCG). Ce dernier devrait s'interroger sur ce que rapportent les sommes investies par le gouvernement fédéral dans les pratiques de comptabilité de management les meilleures. Le BCG pourrait également orienter les ministères et les organismes gouvernementaux vers l'environnement (ou les déterminants du succès) qu'il convient de mettre en place pour assurer la réussite des projets de CPA. [source]


    A Mathematical Programming Approach for Procurement Using Activity Based Costing

    JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2000
    Zeger Degraeve
    Activity Based Costing and Management are important topics in today's management accounting literature. While there has been much attention paid in the Activity Based Costing literature to customer profitability analysis, process improvement and product design, there has been far less notice taken of purchasing. In this paper we develop an Activity Based Costing approach for the determination of procurement strategies. Vendor selection using an Activity Based Costing approach is choosing the combination of suppliers for a given product group that minimizes the total costs associated with the purchasing strategy. To this end we develop a mathematical programming model where decisions involve the selection of vendors and the determination of order quantities. The system computes the total cost of ownership, thereby increasing the objectivity in the selection process and giving the opportunity for various kinds of sensitivity analysis. [source]


    The Impact of Activity-Based Costing on Managerial Decisions at Insteel Industries,A Field Study

    JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2002
    V.G. Narayanan
    In this field-based study, we interview top- and middle-level managers at Insteel Industries and conduct statistical analysis of firm-level data in order to shed light on whether activity-based costing (ABC) provides new information to managers and whether activity-based management (ABM) significantly influences product and customer-related decisions. We find that after the ABC analysis, Insteel undertook a number of process improvements that resulted in significant cost savings. Additionally, Insteel displayed a higher propensity to discontinue or increase prices of products and discontinue customers that were found comparatively unprofitable in the ABC study. Thus we provide empirical evidence that ABC influences both strategic and operational managerial decisions. [source]


    The Implementation of Target Costing in the United States: Theory Versus Practice

    JOURNAL OF SUPPLY CHAIN MANAGEMENT, Issue 1 2006
    Lisa M. Ellram
    SUMMARY Target costing has been touted as a process that can significantly improve new product development results in the accounting, engineering, operations management, and purchasing literature. The target costing process considers the voice of the customer, incorporates earlier supplier involvement and concurrent engineering, utilizes cross-functional teams, and focuses on creating a good or service that is both desirable and affordable to the customer and profitable to the producing organization. Unlike previous studies, which have focused on Japanese firms, or used single case studies, this paper uses the findings from case studies of 11 organizations actively engaged in the target costing process. This paper explores how the target costing process is used in practice in the United States, comparing it with the popular theoretical model of target costing. It helps shed light on to target costing practices of U.S. and other Western firms, and highlights the often overlooked role of the purchasing function in successful target costing efforts. [source]


    Target Costing für Werkstoffe , Potenziale und Methodik

    MATERIALWISSENSCHAFT UND WERKSTOFFTECHNIK, Issue 7 2009
    U. Götze
    Target Costing; Materials; Cost Management Abstract Das Target Costing , in der Betriebswirtschaftslehre ein Standardinstrument des Kostenmanagement , findet in der wirtschaftlich orientierten Literatur zu den Werkstoffwissenschaften bisher kaum Erwähnung. Dabei bestehen auch für die Entwickler, Hersteller oder Verwender von Werkstoffen große Potentiale im Hinblick auf die Sicherung bzw. Verbesserung der Wirtschaftlichkeit. Daran setzt der vorliegende Beitrag an. In diesem werden zunächst diese Potentiale eines werkstoffbezogenen Target Costing herausgearbeitet. Dann wird aufgezeigt, wie die allgemeine Methodik des Target Costing aus der Sicht von Werkstoffverwendern einerseits und Werkstoffentwicklern/-herstellern andererseits zu modifizieren ist, um den Besonderheiten von Werkstoffen gerecht zu werden. Target Costing for Materials , Potentialities and Methodology Target Costing is a standard instrument of cost management in business administration, but hardly mentioned in the economic oriented literature on material sciences. Nevertheless there are high potentialities for developers, producers, or users of materials regarding the improvement of efficiency. Therefore, this article will present these potentialities of a material oriented Target Costing. Besides, the general methodology of Target Costing will be modified to meet the specifics of materials from the perspectives of users of materials on the one hand and developers respectively producers of materials on the other. [source]


    Trends in affordability of the Illawarra Healthy Food Basket 2000,2007

    NUTRITION & DIETETICS, Issue 1 2009
    Peter WILLIAMS
    Abstract Aims:, The Illawarra Healthy Food Basket was developed as one measure to monitor the affordability of healthy eating in Australia. It consists of 57 items selected to meet the nutritional requirements of a reference family of five. The basket was first costed in the Illawarra region of Australia in 2000 and again in 2001 and 2003. The present study aimed to repeat the costing of the basket in 2005 and 2007 and to assess the trends in affordability since 2000. Methods:, Costing was carried out in the same five suburbs as previous surveys, using a large supermarket, greengrocer and butcher from each. Comparison data included: welfare entitlements obtained from Centrelink, average weekly earnings and the consumer price index for food. Main outcome measures:, The average weekly cost of the Illawarra Healthy Food Basket in 2005 and 2007, and trends in the costs compared with changes in average weekly earning and welfare benefits for the reference family. Results:, The total cost of the Illawarra Healthy Food Basket in 2007 was $242.49, an increase of 20.4% since 2000, with the greatest increases in the prices of vegetables (55.7%) and fruit (46.7%). Fruits, vegetables and meat were cheaper at independent grocers and butchers than in supermarkets. The percentage of average weekly earning or welfare payments required to purchase the Illawarra Healthy Food Basket remained stable at slightly below 30%. Conclusion:, These results indicate that the affordability of healthy eating has remained relatively constant from 2000 to 2007, but the significant increases in fruit and vegetable prices might be making healthy food choices more difficult. [source]


    Environmental Costing in Capital Investment Decisions: Electricity Distributors and the Choice of Power Poles

    AUSTRALIAN ACCOUNTING REVIEW, Issue 1 2008
    Craig Deegan
    Australian electricity distribution businesses use a vast number of poles in their networks. In making their purchase decisions, they can choose between types of pole. It might come from an old-growth forest or a plantation, or be made from cement, steel or fibreglass. This paper discusses how Australian electricity distribution businesses currently account (or fail to account) for the social and environmental implications of the production and use of power poles. The discussion highlights the many factors to be considered in a life-cycle costing exercise. The paper provides suggestions for future practice which have implications not only for electricity distribution businesses, but for industry generally. [source]


    Can Target Costing and Whole Life Costing be Applied in the Construction Industry?: Evidence from Two Case Studies

    BRITISH JOURNAL OF MANAGEMENT, Issue 4 2000
    Davide Nicolini
    Building on the results of a far-reaching action research project we discuss an attempt to introduce target costing in the UK construction industry. After examining some of the issues facing the UK construction industry, we examine the case for using target costing as a way of supporting supply-chain integration in view of an improvement of the level of profitability and quality of the industry. After presenting evidence from two pilot projects we propose some considerations on target costing and its applicability to the UK construction sector and derive directions for future research. [source]


    Avoiding Accounting Fixation: Determinants of Cognitive Adaptation to Differences in Accounting Method,

    CONTEMPORARY ACCOUNTING RESEARCH, Issue 2 2005
    DAVID T. DEARMAN
    Abstract Much research over the last 30 years has provided evidence that individuals display accounting fixation; that is, their cognitive process does not appropriately adapt to cross-sectional or temporal differences in an accounting method. This paper presents the results of a quasi-experimental test of the hypothesis that cognitive adaptation to a change in accounting method is an ordinal interactive function of three person characteristics: relevant accounting knowledge, general problem-solving ability, and intrinsic motivation to appropriately engage in the decision task. Based on a product-pricing decision task in which participants are provided with product costs reported by two generally employed product-costing methods (activity-based costing [ABC] and volume-based costing), the results show that the majority of participants did not change their cognitive behavior when there was a change in the costing method. Further, those participants who did adapt to the change in accounting method, and thus avoided accounting fixation, did so by debiasing costs reported by volume-based costing but not by ABC. Finally, these adapters generally exhibited high values for all three of the person characteristics compared with those who did not adapt. [source]


    Competition and Cost Accounting: Adapting to Changing Markets,

    CONTEMPORARY ACCOUNTING RESEARCH, Issue 2 2002
    Ranjani Krishnan
    Abstract The relation of competition and cost accounting has been the subject of conflicting prescriptions, theories, and empirical evidence. Practitioner literature and textbooks argue that higher competition generally requires more accurate product costing. Theoretical economic analysis, in contrast, predicts that the optimal level of product-costing accuracy is sometimes higher at lower levels of competition. Results of survey research are inconsistent, suggesting a need for further identification of conditions under which higher competition leads to more accurate product costing. This study shows experimentally that individuals' choices of the level of product-costing accuracy depend not only on the current level of competition but also on the previous level of competition , that is, on an interaction between market structure (monopoly, duopoly, and four-firm competition) and market history (increasing versus decreasing competition). In the experiment, subjects decide on the quantity of data to collect at a pre-set price per datum to support more accurate product-cost estimates. Subjects collect the most cost data (i.e., choose the most accurate product costing) in monopoly, collect the least in duopoly, and an intermediate amount in the four-firm market, consistent with the pattern of optimal cost-data collection in Hansen's 1998 model. The process of convergence to the optimum differs significantly across market types and market histories, however. Subjects who begin in four-firm competition adapt more successfully to change than those who begin in monopoly. The lowest levels of decision performance occur when ex-monopolists face their first competitor: they overreact to this first encounter with competition and overspend on cost data. [source]


    Integration of Different Data Bodies for Humanitarian Decision Support: An Example from Mine Action

    DISASTERS, Issue 4 2003
    Aldo A. Benini
    Geographic information systems (GIS) are increasingly used for integrating data from different sources and substantive areas, including in humanitarian action. The challenges of integration are particularly well illustrated by humanitarian mine action. The informational requirements of mine action are expensive, with socio,economic impact surveys costing over US$1.5 million per country, and are feeding a continuous debate on the merits of considering more factors or ,keeping it simple'. National census offices could, in theory, contribute relevant data, but in practice surveys have rarely overcome institutional obstacles to external data acquisition. A positive exception occurred in Lebanon, where the landmine impact survey had access to agricultural census data. The challenges, costs and benefits of this data integration exercise are analysed in a detailed case study. The benefits are considerable, but so are the costs, particularly the hidden ones. The Lebanon experience prompts some wider reflections. In the humanitarian community, data integration has been fostered not only by the diffusion of GIS technology, but also by institutional changes such as the creation of UN-led Humanitarian Information Centres. There is a question whether the analytic capacity is in step with aggressive data acquisition. Humanitarian action may yet have to build the kind of strong analytic tradition that public health and poverty alleviation have accomplished. [source]


    REFORM OF THE PERSONAL INCOME TAX SYSTEM IN AUSTRALIA

    ECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue 4 2005
    Jeff Pope
    This paper examines the case for reform of Australia's Personal Income Tax (PIT), argues that it is outdated, and demonstrates a growing consensus for reform. The importance of tax avoidance, particularly the use of trusts, in the Australian PIT system, and arguably its abrogation of modern-day criteria of what constitutes a ,good tax', is emphasised. Three possible ,reform' options are identified: the ,tinkering and tokenism' approach of current Government policy; moderate reform and a proposed ,significant reform option' costing around $22 billion. Essentially this comprises company and top PIT rate equalisation and a doubling of the tax-free threshold. But funding this is problematical. Two key arguments of the paper are that: (real) simplification i.e. lower compliance costs, is an important yet usually down-played objective in reform proposals; savings from reform denying PIT deductions such as work expenses are insufficient to achieve significant PIT reform. An increase in the rate of the Goods and Services Tax (GST) from 10% to 15% (with a compensation package) is therefore advocated in a revenue-neutral analysis ignoring current Government budget surpluses. The overall outcome would be a simplified, more equitable and incentive-driven PIT system that would move Australia closer to the PIT and GST policies of other OECD countries. But the political difficulties of reform mean that the Government's ,tinkering' approach is likely to continue. [source]


    LCC,The economic pillar of sustainability: Methodology and application to wastewater treatment

    ENVIRONMENTAL PROGRESS & SUSTAINABLE ENERGY, Issue 4 2003
    Gerald Rebitzer
    Industrial applications of supply chain cost management, along with life cycle costing of goods and services, are increasing. Several industrial sectors, in particular the automotive, electronics, and primary materials, have engaged in programs to coordinate upstream and downstream activities to reduce environmental burdens. At the same time, there is an increasing need to pass on information on product, material, and energy flows along the supply chain, as well as to provide data on the use and end-of-life phases of goods and services. Therefore, methods to analyze, assess, and manage these flows, from an economic as well as an environmental perspective, are of essential importance, particularly in established large-scale industries where suppliers are increasingly challenged to provide comprehensive cost and environmental information. In this context, a life cycle costing analysis (LCC), conducted as part of life cycle management activities, can provide important opportunities. Therefore, this paper focuses on a life cycle assessment (LCA)-based LCC method, which utilizes an LCA model as a basis for cost estimations in product development and planning. A case study on life cycle costing of wastewater treatment illustrates the practical use and benefits of the method. [source]


    Success of activity management practices: the influence of organizational and cultural factors

    ACCOUNTING & FINANCE, Issue 1 2007
    Kevin Baird
    M40 Abstract This study examines the success of activity management practices and the organizational and cultural factors affecting success at each of Gosselin's (1997) three levels of activity analysis (AA), activity cost analysis (ACA) and activity-based costing (ABC). Data were collected by survey questionnaire from a random sample of managers of Australian business units. The results indicate that activity management is moderately successful in Australian organizations, with greater use associated with higher levels of success. Two organizational factors (top management support and link to quality) were associated with success at each of Gosselin's three levels, whereas training was associated at the AA and ACA levels. The cultural factor of outcome orientation was associated with success at each level, with attention to detail important at the ABC level. Organizational factors were more strongly associated with activity management success than cultural factors. [source]


    Technological and organizational influences on the adoption of activity-based costing in Australia

    ACCOUNTING & FINANCE, Issue 3 2004
    David A. Brown
    The present paper examines one set of potential reasons for the paradox as to why so few firms have adopted activity-based costing (ABC) despite the demonstrated benefits of this costing system. A cross-sectional survey of Australian firms is used to examine the influence of seven technological and organizational factors on firms' initial interest in ABC and their decision to adopt it or not. The organizational factors of top management support, the support of an internal champion, and organizational size were shown to be associated with initial interest in ABC. The decision to adopt or reject ABC had one organizational factor associated with it, the support of an internal champion. [source]


    The Measurement of Success of Activity-Based Costing and Its Determinants: A Study within Canadian Federal Government Organizations,/L'évaluation Du Succès De La Comptabilité Par Activités Et Ses Déterminants: Étude D'Organismes Du Gouvernement Fédéral Du Canada

    ACCOUNTING PERSPECTIVES, Issue 3 2007
    Anne Fortin
    ABSTRACT This research first measures the success of activity-based costing (ABC) implementation within Canadian federal government organizations along five constructs, which are the use and frequency of use of the ABC information, decision actions taken, financial improvements, evaluation by management as to overall success, and a composite measure of the four constructs. Second, it identifies the determinants of ABC success. The success determinants used in this study are organizational culture, involvement of a champion, change process, commitment, controls, and continuous education. Measures of ABC success and determinants were obtained using a survey of managers who have participated in ABC implementation in Canadian federal government organizations. The study found that the benefits derived from ABC implementation within Canadian public sector organizations do not measure up to the efforts invested, although respondents consider that some financial improvements have resulted from the implementations. Controls and culture proved to be the two variables that significantly relate to ABC success. The results could have implications for policymaking organizations such as the Treasury Board Secretariat of Canada and the Office of the Comptroller General (OCG). The latter should question the benefits of investments made in management accounting best practices in the federal government. The OCG could also direct departments and agencies to the right environment (success determinants) to be put in place in order to ensure the success of ABC initiatives. RÉSUMÉ Les auteurs évaluent le succès de la mise en ,uvre de la comptabilité par activités (CPA) au sein d'organismes du gouvernement fédéral du Canada selon cinq paramètres, soit l'utilisation et la fréquence d'utilisation de l'information produite par la CPA, les mesures décisionnelles prises, les améliorations financières, l'évaluation du succès global par la direction et une mesure composite regroupant ces quatre paramètres. Ils définissent ensuite les déterminants du succès de la CPA. Les déterminants utilisés dans la présente étude sont la culture organisationnelle, l'intervention d'un défenseur, le processus de changement, l'engagement, les contrôles et la formation continue. Les auteurs obtiennent les critères d'évaluation et les déterminants du succès de la CPA en procédant à un sondage auprès de cadres ayant participé à la mise en ,uvre de la CPA dans des organismes du gouvernement fédéral du Canada. Ils constatent que les avantages découlant de cet exercice au sein des organismes du secteur public canadien ne sont pas à la hauteur des efforts investis, même si les répondants estiment en avoir tiré certaines améliorations financières. Il semble que les variables des contrôles et de la culture soient celles qui se rattachent de façon significative au succès de la CPA. Les résultats de l'étude pourraient avoir des conséquences pour les organismes responsables de l'élaboration des politiques comme le Secrétariat du Conseil du Trésor du Canada et le Bureau du contrôleur général (BCG). Ce dernier devrait s'interroger sur ce que rapportent les sommes investies par le gouvernement fédéral dans les pratiques de comptabilité de management les meilleures. Le BCG pourrait également orienter les ministères et les organismes gouvernementaux vers l'environnement (ou les déterminants du succès) qu'il convient de mettre en place pour assurer la réussite des projets de CPA. [source]


    Decubitus ulcers: A review of the literature

    INTERNATIONAL JOURNAL OF DERMATOLOGY, Issue 10 2005
    Cheryl Bansal BA
    Decubitus ulcers are a worldwide health care concern affecting tens of thousands of patients and costing over a billion dollars a year. Susceptibility to pressure ulcers comes from a combination of external factors (pressure, friction, shear force, and moisture), and internal factors (e.g. fever, malnutrition, anaemia, and endothelial dysfunction). Often, enough damage is done to create the basis for a decubitus ulcer after as little as 2 h of immobility, a situation which may be difficult to avoid if the patient must undergo prolonged surgery or remain bedridden. Damage owing to pressure may also occur hours before the patient receives medical attention, especially if the patient falls or becomes immobilized owing to a vascular event. Several classification systems for decubitus ulcers have been described, based on where injury first occurs. The histologic progression of decubitus ulcers is a dynamic process involving several stages, each having characteristic histologic features. A team-focused approach integrating all aspects of care, including pressure relief, infection control, nutrition, and surgery, may improve healing rates. With accurate risk assessment and preventative care, we can hope to minimize complications and mortality owing to decubitus ulcers. [source]


    Application of activity-based costing (ABC) for a Peruvian NGO healthcare provider

    INTERNATIONAL JOURNAL OF HEALTH PLANNING AND MANAGEMENT, Issue 1 2001
    Dr. Hugh Waters
    Abstract This article describes the application of activity-based costing (ABC) to calculate the unit costs of the services for a health care provider in Peru. While traditional costing allocates overhead and indirect costs in proportion to production volume or to direct costs, ABC assigns costs through activities within an organization. ABC uses personnel interviews to determine principal activities and the distribution of individual's time among these activities. Indirect costs are linked to services through time allocation and other tracing methods, and the result is a more accurate estimate of unit costs. The study concludes that applying ABC in a developing country setting is feasible, yielding results that are directly applicable to pricing and management. ABC determines costs for individual clinics, departments and services according to the activities that originate these costs, showing where an organization spends its money. With this information, it is possible to identify services that are generating extra revenue and those operating at a loss, and to calculate cross subsidies across services. ABC also highlights areas in the health care process where efficiency improvements are possible. Conclusions about the ultimate impact of the methodology are not drawn here, since the study was not repeated and changes in utilization patterns and the addition of new clinics affected applicability of the results. A potential constraint to implementing ABC is the availability and organization of cost information. Applying ABC efficiently requires information to be readily available, by cost category and department, since the greatest benefits of ABC come from frequent, systematic application of the methodology in order to monitor efficiency and provide feedback for management. The article concludes with a discussion of the potential applications of ABC in the health sector in developing countries. Copyright © 2001 John Wiley & Sons, Ltd. [source]


    Activity-Based Pricing in a Monopoly

    JOURNAL OF ACCOUNTING RESEARCH, Issue 3 2003
    V. G. Narayanan
    abstract In this article, I study the interaction between cost accounting systems and pricing decisions in a setting where a monopolist sells a base product and related support services to customers whose preference for support services is known only to them. I consider two pricing mechanisms,activity-based pricing (ABP) and traditional pricing,and two cost-accounting systems,activity-based costing (ABC) and traditional costing, for support services. Under traditional pricing, only the base product is priced, whereas support services are provided free because detailed cost-driver volume information on the consumption of support services by each customer is unavailable. Under ABP, customers pay based on the quantities consumed of both the base product and the support services because detailed cost-driver volume information is available for each customer. Likewise, under traditional costing for support services the firm makes pricing decisions on cost signals that are noisier than they are under ABC. I compare the equilibrium quantities of the base product and support services sold, the information rent paid to the customers, and the expected profits of the monopolist under all four combinations of cost-driver volume and cost-driver rate information. I show that ABP helps reduce control problems, such as moral hazard and adverse selection problems, for the supplier and increases the supplier's ability to engage in price discrimination. I show that firms are more likely to adopt ABP when their customer base is more diverse, their customer support costs are more uncertain, their costing system has lower measurement error, and the variable costs of providing customer support are higher. Firms adopt ABC when their cost-driver rates for support services under traditional costing are noisier measures of actual costs relative to their cost-driver rates under ABC and when the actual costs of support services are inherently uncertain. I also show that cost-driver rate information and cost-driver volume information for support services are complements. Although the prior literature views ABC and activity-based management (ABM) as facilitating better decision making, I show that ABC and ABP (a form of ABM) are useful tools for addressing control problems in supply chains. [source]


    Full absorption: The good, the bad, and the ugly

    JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2008
    Alan Vercio
    There are good, bad, and ugly uses associated with full absorption costing. Good characteristics include ensuring that all dollars are accounted for. Bad characteristics include combining costs that do not have similar cost driver patterns. Ugly characteristics include decisions made with fully absorbed cost data that combines different drivers. Financial accounting inventory valuation forces us to combine unlike drivers of cost. But there is a relatively easy way to manage around this for internal reporting. An unfortunate outcome of letting the bad and the ugly creep into the full-absorption costing process is that the value of full absorption has been undermined, and consultants often recommend not using full absorption for decision making (a case of throwing the baby out with the bathwater). This article provides insight and recommendations for getting the full value from full-absorption costing. © 2008 Wiley Periodicals, Inc. [source]


    A new look at manufacturing using CAM-I's capacity management model

    JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2003
    Andrew Muras
    A capacity management model helps managers evaluate capacity by providing a visual presentation of problem areas. This can lead to much-needed insight to address many management issues in manufacturing and production. This article outlines an application of the capacity model developed by the Consortium for Advanced Manufacturing-International (CAM-I), along with the synergistic efforts of product costing and process improvement initiatives. © 2003 Wiley Periodicals, Inc. [source]


    Supercharging Your ABC: Use Revenue Data!

    JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2002
    Peter C. Brewer
    As in most managerial decision making, activity-based costing (ABC) requires that managers first determine what information is relevant. Historically, the focus of ABC systems has been almost entirely on costs, yet revenue-oriented information is often highly relevant and useful. Incorporating both the revenue and expense sides of the income statement can make ABC far more powerful. © 2002 Wiley Periodicals, Inc. [source]


    CITGO Petroleum Meeting the Challenge with ABM

    JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2002
    Marlene B. Rodriguez
    Activity-based management (ABM) has helped process and energy industries cut costs and improve efficiencies, because it provides the baseline data needed for performance measurement, outsourcing, product costing, and capacity analysis. However, implementations of ABM have to be tailored to meet the unique challenges posed by Shared Services functions and operational units. This article outlines CITGO's implementation techniques for ABM and describes the company's results for its Shared Services and operations business units. © 2002 Wiley Periodicals, Inc. [source]


    Why Is "Integrated" ABC Better?

    JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2002
    David E. Keys
    Traditionally, the various parts of an organization have been assumed to be independent. This was done mainly to simplify calculations, though the assumption is almost always inaccurate in reality. But computer technology now makes it possible to account for the many interrelationships of activities. The explicit consideration of these interrelationships in product and service costing can be referred to as integrated activity-based costing. By measuring these interrelationships, managers can better understand the parts of an organization, how they relate with each other, and how they can be integrated into the entire organization. © 2002 Wiley Periodicals, Inc. [source]


    ABC/M: Which companies have success?

    JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2001
    Dan Swenson
    No technique works equally well for every company. That's especially true for activity-based costing and management (ABC/M). But which companies and industries have had the greatest success,and why? © 2001 John Wiley & Sons, Inc. [source]


    The Impact of Activity-Based Costing on Managerial Decisions at Insteel Industries,A Field Study

    JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2002
    V.G. Narayanan
    In this field-based study, we interview top- and middle-level managers at Insteel Industries and conduct statistical analysis of firm-level data in order to shed light on whether activity-based costing (ABC) provides new information to managers and whether activity-based management (ABM) significantly influences product and customer-related decisions. We find that after the ABC analysis, Insteel undertook a number of process improvements that resulted in significant cost savings. Additionally, Insteel displayed a higher propensity to discontinue or increase prices of products and discontinue customers that were found comparatively unprofitable in the ABC study. Thus we provide empirical evidence that ABC influences both strategic and operational managerial decisions. [source]


    The Implementation of Target Costing in the United States: Theory Versus Practice

    JOURNAL OF SUPPLY CHAIN MANAGEMENT, Issue 1 2006
    Lisa M. Ellram
    SUMMARY Target costing has been touted as a process that can significantly improve new product development results in the accounting, engineering, operations management, and purchasing literature. The target costing process considers the voice of the customer, incorporates earlier supplier involvement and concurrent engineering, utilizes cross-functional teams, and focuses on creating a good or service that is both desirable and affordable to the customer and profitable to the producing organization. Unlike previous studies, which have focused on Japanese firms, or used single case studies, this paper uses the findings from case studies of 11 organizations actively engaged in the target costing process. This paper explores how the target costing process is used in practice in the United States, comparing it with the popular theoretical model of target costing. It helps shed light on to target costing practices of U.S. and other Western firms, and highlights the often overlooked role of the purchasing function in successful target costing efforts. [source]


    Acceptability, storage stability and costing of ,-amylase-treated maize,beans,groundnuts,bambaranuts complementary blend

    JOURNAL OF THE SCIENCE OF FOOD AND AGRICULTURE, Issue 6 2007
    Victor O Owino
    Abstract The effects of ,-amylase treatment on physical properties, acceptability to mothers, and cost of roasted and extruded maize,beans,groundnuts,bambaranuts complementary porridge recipes were assessed prior to their industrial production. Storage stability of the extruded ,-amylase-treated fortified blend was assessed at 2 weeks and 6 months by sensory evaluation, peroxide value, water activity and microbiological load. The use of ,-amylase at 0.04% w/w enhanced porridge acceptability and resulted in 88% and 122% increase in flour concentration for roasted and extrusion-cooked porridge flour, respectively, while maintaining porridge viscosity at 1000-fold lower than that of traditionally used porridges. The extrusion cooked blend was stable for 6 months. ,-Amylase application increased the unit cost of the developed blend by only 1.4%. The total cost was less than US $ 2 kg,1, half the minimum price of commercially available complementary foods. Further work on marketing and the efficacy of this inexpensive food on growth of infants is warranted. Copyright © 2007 Society of Chemical Industry [source]


    Economic evaluation and 1-year survival analysis of MARS in patients with alcoholic liver disease

    LIVER INTERNATIONAL, Issue 2003
    Franz P. Hessel
    Abstract Objective of this study was to determine 1-year survival, costs and cost-effectiveness of the artificial liver support system Molecular Adsorbent Recirculating System (MARS) in patients with acute-on-chronic liver failure (ACLF) and an underlying alcoholic liver disease. In a case,control study, 13 patients treated with MARS were compared to 23 controls of similar age, sex and severity of disease. Inpatient hospital costs data were extracted from patients' files and hospital's internal costing. Patients and treating GPs were contacted, thus determining resource use and survival 1-year after treatment. Mean 1-year survival time in MARS group was 261 days and 148 days in controls. Kaplan,Meier analysis shows advantages of MARS patients (Logrank: P = 0.057). Direct medical costs per patient for initial hospital stay and 1-year follow-up from a payer's perspective were ,18 792 for MARS patients and ,9638 for controls. The costs per life-year gained are ,29 719 (time horizon 1 year). From a societal perspective, the numbers are higher (costs per life-year gained: ,79 075), mainly because of the fact that there is no regular reimbursement of MARS and therefore intervention costs were not calculated from payer's perspective. A trade-off between medical benefit and higher costs has to be made, but 1-year results suggest an acceptable cost-effectiveness of MARS. Prolonging the time horizon and including indirect costs, which will be done in future research, would probably improve cost-effectiveness. [source]


    Trends in affordability of the Illawarra Healthy Food Basket 2000,2007

    NUTRITION & DIETETICS, Issue 1 2009
    Peter WILLIAMS
    Abstract Aims:, The Illawarra Healthy Food Basket was developed as one measure to monitor the affordability of healthy eating in Australia. It consists of 57 items selected to meet the nutritional requirements of a reference family of five. The basket was first costed in the Illawarra region of Australia in 2000 and again in 2001 and 2003. The present study aimed to repeat the costing of the basket in 2005 and 2007 and to assess the trends in affordability since 2000. Methods:, Costing was carried out in the same five suburbs as previous surveys, using a large supermarket, greengrocer and butcher from each. Comparison data included: welfare entitlements obtained from Centrelink, average weekly earnings and the consumer price index for food. Main outcome measures:, The average weekly cost of the Illawarra Healthy Food Basket in 2005 and 2007, and trends in the costs compared with changes in average weekly earning and welfare benefits for the reference family. Results:, The total cost of the Illawarra Healthy Food Basket in 2007 was $242.49, an increase of 20.4% since 2000, with the greatest increases in the prices of vegetables (55.7%) and fruit (46.7%). Fruits, vegetables and meat were cheaper at independent grocers and butchers than in supermarkets. The percentage of average weekly earning or welfare payments required to purchase the Illawarra Healthy Food Basket remained stable at slightly below 30%. Conclusion:, These results indicate that the affordability of healthy eating has remained relatively constant from 2000 to 2007, but the significant increases in fruit and vegetable prices might be making healthy food choices more difficult. [source]