Integrating activity-based costing and environmental cost accounting systems: a case study

2010 ◽  
Vol 4 (2) ◽  
pp. 186 ◽  
Author(s):  
Wen Hsien Tsai ◽  
Thomas W. Lin ◽  
Wen Chin Chou
Keyword(s):  
Cost Accounting ◽  
Environmental Cost ◽  
Activity Based Costing ◽  
Accounting Systems

Activity-Based Costing and Cost Interdependencies among Products: The Denim Finishing Company

2005 ◽  
Vol 20 (1) ◽  
pp. 51-62 ◽  
Author(s):  
Dennis Caplan ◽  
Nahum D. Melumad ◽  
Amir Ziv
Keyword(s):  
Production Process ◽  
Production Line ◽  
New Product ◽  
Cost Accounting ◽  
Activity Based Costing ◽  
Cost Information ◽  
Accounting Systems ◽  
Full Cost ◽  
Level Information ◽  
The Cost

A fictional example illustrates how interdependencies among products in the production process, and the costs associated with those interdependencies, challenge the ability of cost accounting systems to generate decision-useful product cost information. The cost interdependency in the current example is a production-line change-over cost that is incurred to retool a machine whenever the production process changes from one product to another. Both marginal costing and full cost activity-based costing (ABC) are employed in an attempt to provide decision-relevant product-level information in connection with the decision to add a new product.

A Comparative Analysis of Activity-Based Costing and Traditional Costing Systems

2012 ◽  
pp. 1429-1440
Author(s):  
Khaled Samaha ◽  
Sara Abdallah
Keyword(s):  
Cost Accounting ◽  
Activity Based Costing ◽  
Strategic Decisions ◽  
Cost Information ◽  
Accounting Systems ◽  
Organizational Environments ◽  
Corporate Commitment ◽  
Traditional Costing ◽  
Abc Method ◽  
Manufacturing Organization

Today, organizational environments are increasingly characterized by an expanding use of advanced technologies. A company’s management accounting system should capture the underlying technology, be consistent with corporate commitment to total quality and increased automation, and promote its efforts to compete on the basis of cost, quality, and lead time. However, the recent literature reveals that traditional cost accounting systems systematically introduce serious product cost distortions, which lead to inappropriate strategic decisions. Activity-Based Costing (ABC) represents an alternative paradigm that is giving more accurate and traceable cost information. The objective of this case is to illustrate the application of ABC method in a single manufacturing organization operating in the metal industry and to compare the results of ABC with volume based costing (traditional costing) method. The results of the application highlight the weak points of volume based costing which assigns factory overhead costs using direct labor-hours or machine-hours as a cost driver. As a result, volume-based costing under-costs low-volume product (i.e. products requiring fewer direct labor hours in total), while it over-costs high-volume products (i.e. products requiring more direct labor-hours in total), and thus, a product is subsidized at the expense of others. In cost accounting this is called cross-subsidization. However, activity-based costing traces overhead consumption by each product and thus provides a more accurate per-unit overhead cost.

What do acquisition activities really cost? A case study in Estonian university libraries

2015 ◽  
Vol 36 (6/7) ◽  
pp. 511-534 ◽  
Author(s):  
Kate-Riin Kont
Keyword(s):  
Relevant Literature ◽  
Cost Accounting ◽  
Activity Based Costing ◽  
University Libraries ◽  
Content Type ◽  
Acquisition Process ◽  
Cost Behavior ◽  
The Difference ◽  
Acquisition Processes

Purpose – The purpose of this paper is to mainly find out how well is time-driven activity-based costing (TDABC) suits for a university library setting in Estonia. For this purpose, all activities related to acquisitions process were identified and recorded in detail, and the cost of all these activities related to acquisition process in Estonian university libraries based on the example of the TDABC method were anlyzed. Design/methodology/approach – The data used in this paper is based on a review of relevant literature to provide an overview of the concept of the different cost accounting methods suitable for the measurement of the acquisition process. Through a case study, conducted among Estonian university libraries, the TDABC approach was used to analyze the acquisition process in university libraries. More specifically, the acquisition process studied concerned print format books, audiovisual documents and sheet music, and covered acquisition processes such as receipt of orders, ordering documents, communication with bookshop (if necessary), receiving documents and communication with the customer. Findings – On the basis of the current study it can be said the TDABC methodology seems to be one of the best tools for understanding cost behavior and for refining a cost system for university libraries. While analyzing the results, it appeared that the difference in time and cost for acquiring a document can be remarkable and concerns both – acquiring foreign documents (documents from other countries) and acquiring domestic documents, and between the university libraries chosen for the current study. Originality/value – The subject of cost accounting as a performance measurement method is in general an unexplored field in Estonian university libraries. Time guidelines for acquiring the documents were, however, quite common in the 1980s in the USSR, including Estonia. Soviet-wide regulatory documents were issued on all library work processes, but each library could still implement their own rules. In the 1990s, the regulations were consigned to oblivion. Very few cost surveys involving different library activities have been carried out in Estonia and none have been published. Where such studies have been conducted, the results remain for internal use only.

scholarly journals Activity-based costing on the example of prune-drying company

2014 ◽  
Vol 59 (3) ◽  
pp. 363-373
Author(s):  
Nikola Popovic ◽  
Marina Vasilic
Keyword(s):  
Indirect Costs ◽  
Cost Accounting ◽  
Production Costs ◽  
Quality Data ◽  
Accounting System ◽  
Activity Based Costing ◽  
Accounting Systems ◽  
Business Decision ◽  
Modern Approach ◽  
Cost Accounting System

This paper examines the possibility of application of the activity-based costing in a company engaged in drying fruit. Activity Based Costing (ABC) was developed due to the shortcomings of traditional cost accounting systems, which was shown to have serious limitations, on one hand, and due to the need for more accurate cost price, on the other. This is of great importance for business decision making, which requires quality data and information, because the intense technical and technological progress has significantly altered the environment companies operate in. Along with this fact, major changes in cost structure occurred, which reflected through the increase of the indirect cost portion, and decrease of direct labor and material costs. Traditional cost accounting methods allocate indirect production costs using keys which are no longer appropriate for the new circumstances, and therefore typically allocate unreasonably high amount of indirect costs to those products which are produced in larger series. ABC cost accounting system firstly allocates indirect costs to pre-defined activities, and afterwards carries them to cost and profit drivers. The application of ABC costing in Serbia is at the very beginning. Having in mind that the privatization and the restructuring phase in the economy is followed by the establishment of a new management with fresh ideas, this can be a good timing for companies to introduce modern approach and modern methods of cost accounting. ABC method is very convenient for application in service companies, food processing industry, confectionery companies, driers, sugar refineries, breweries, dairies, mills etc.

scholarly journals Cost Accounting for Management of Health Services in a Hospital

2017 ◽  
Vol 3 (329) ◽  
Author(s):  
Luiza Piersiala
Keyword(s):  
Health Care ◽  
Health Care Services ◽  
Cost Accounting ◽  
Activity Based Costing ◽  
Management Information ◽  
Accounting Systems ◽  
Legal Documents ◽  
Care Services ◽  
Different Types ◽  
The Subject

In Polish hospitals there are clear standards for cost accounting which can be used to report information on costs and to correctly price health care services. Medical activities of hospitals are very diverse because of the existence of different types of entities and a variety of services. The article aims to discuss the essence of the subject of cost accounting in medical entities (hospitals), in particular activity‑based costing. The article includes the conclusions of the study of the literature in the field of the subject matter and legal documents concerning the Polish health care system, especially the existing costing standards, using the research method of literature and legal acts analysis. The article, in the theoretical part, presents the essence of cost accounting systems. Additionally, elements of the new legislation are presented, with the emphasis on those that are potentially important in generating cost management information. The article provides an example of the use of resource costing in a gynaecology and obstetrics department of a hospital.

A Comparative Analysis of Activity-Based Costing and Traditional Costing Systems

2011 ◽  
pp. 41-53
Author(s):  
Khaled Samaha ◽  
Sara Abdallah
Keyword(s):  
Cost Accounting ◽  
Activity Based Costing ◽  
Strategic Decisions ◽  
Cost Information ◽  
Accounting Systems ◽  
Organizational Environments ◽  
Corporate Commitment ◽  
Traditional Costing ◽  
Abc Method ◽  
Manufacturing Organization

Today, organizational environments are increasingly characterized by an expanding use of advanced technologies. A company’s management accounting system should capture the underlying technology, be consistent with corporate commitment to total quality and increased automation, and promote its efforts to compete on the basis of cost, quality, and lead time. However, the recent literature reveals that traditional cost accounting systems systematically introduce serious product cost distortions, which lead to inappropriate strategic decisions. Activity-Based Costing (ABC) represents an alternative paradigm that is giving more accurate and traceable cost information. The objective of this case is to illustrate the application of ABC method in a single manufacturing organization operating in the metal industry and to compare the results of ABC with volume based costing (traditional costing) method. The results of the application highlight the weak points of volume based costing which assigns factory overhead costs using direct labor-hours or machine-hours as a cost driver. As a result, volume-based costing under-costs low-volume product (i.e. products requiring fewer direct labor hours in total), while it over-costs high-volume products (i.e. products requiring more direct labor-hours in total), and thus, a product is subsidized at the expense of others. In cost accounting this is called cross-subsidization. However, activity-based costing traces overhead consumption by each product and thus provides a more accurate per-unit overhead cost.

Environmental Cost Accounting in a Small Enterprise – A Case Study

2021 ◽  
pp. 1-16
Author(s):  
Grzegorz BUCIOR ◽  
Arleta SZADZIEWSKA
Keyword(s):  
Natural Environment ◽  
Environmental Awareness ◽  
Cost Accounting ◽  
Environmental Cost ◽  
Small Enterprise ◽  
Business Activity ◽  
Environmental Costs

The studies conducted so far in Poland indicate not only the low environmental awareness of SMEs, but also incorrect reporting of their impact on the natural environment. What is more, in entities from this group, the environmental costs arising in the course of their business activity are undervalued.

scholarly journals A Typology of Cost Accounting Practices Based on Activity-Based Costing – A Strategic Cost Management Approach

2019 ◽  
Vol 14 (2) ◽  
pp. 161-184
Author(s):  
Gregory Wegmann ◽  
Keyword(s):  
Cost Management ◽  
Cost Accounting ◽  
Management Approach ◽  
Activity Based Costing ◽  
Management Activity ◽  
Professional Literature ◽  
Accounting Systems ◽  
Strategic Objectives ◽  
Strategic Cost Management ◽  
The Cost

This article examines cost accounting methods containing one or more activity-based costing (ABC) like dimensions. The objective is to analyze cost accounting proposals with, in part, a philosophy reminiscent ABC. The research purposes are to analyze the strategic dimension of the methods described and to build a typology useful for managers. The discussion leads to a four-dimensional typology based on three strategic objectives assigned to the cost accounting systems. The foundation of the research is the Strategic Cost Management Theory from which emerges the ABC philosophy. The methodology applied is an academic and professional literature review. The typology designed shows common points and similarities of the methods observed and their strategic dimensions. Some of the methods studied are more or less useful for practitioners, according to the situation of their companies. Keywords: strategic cost management, activity-based costing, typology

scholarly journals A case study on the application of activity based costing on the magnetic inductor

2021 ◽  
Vol 10 ◽  
pp. 195-205
Author(s):  
Nurul Farahin Zamrud ◽  
Sri Nur Areena Mohd Zaini ◽  
Mohd Yazid Abu
Keyword(s):  
Cost Accounting ◽  
Cost Driver ◽  
Production Costs ◽  
Activity Based Costing ◽  
Economic Reality ◽  
Abc Method ◽  
The 1960S ◽  
The Moment ◽  
The Cost

Speedy improvements in cost accounting since the 1960s have been noticed, particularly after the 1980s, in the percentage of total cost, overhead costs have increased. The problem of overhead allocation was faced by several companies and a disparity between the available methods of overhead allocation was developed. Because of skewed facts about the viability of their orders, goods and clients, traditional cost accounting (TCA) not anymore represents the actual economic reality. Consequently, in the moment of increasingly growing material liquidity and ambiguity, a new costing approach is needed to address the weakness of TCA. The goal of the study is to establish a new costing structure using activity based costing (ABC) method to the magnetic inductor for better precision. The case study is located at electronic industry in Pahang, Malaysia. ABC reports on the costs of manufacturing, selling or funding the goods used in the operations. The job was done correctly by the operator to accomplish the entire mission. The maximum time used by operators is at epoxy application activity which is 44.04% and the smallest is 0.64% at oven curing and boundary inspection activity. The highest amount of cost of capacity is epoxy application activity with MYR 1,665,600.00 and the quantity of material utilized is selected as the cost driver. Since the product required volume is up to 10%, production costs are expected to increase by MYR 4,160,614.85 while the unit product cost is forecast at MYR 0.79. Therefore, ABC is an cost management insightful process and cost control efficient approach.

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