A Comparative Study of Activity-based Costing and Traditional Costing: Take DY Food Company as an Example

2021 ◽  
Vol 2 (1) ◽  
pp. 53-68
Author(s):  
Haiyan Bai
Keyword(s):  
Comparative Study ◽  
Activity Based Costing ◽  
Food Company ◽  
Traditional Costing

The Value of Activity-Based Costing in Competitive Pricing Decisions

2004 ◽  
Vol 16 (1) ◽  
pp. 133-148 ◽  
Author(s):  
Eddy Cardinaels ◽  
Filip Roodhooft ◽  
Luk Warlop
Keyword(s):  
Price Setting ◽  
Activity Based Costing ◽  
Market Segments ◽  
Informative Feedback ◽  
Pricing Decisions ◽  
Cost System ◽  
Cost Allocations ◽  
Traditional Costing ◽  
Market Feedback ◽  
Competitive Pricing

This paper reports experimental evidence on the merits of activity-based costing (ABC) for price-setting in competitive markets that differ in their ability to provide informative feedback. Earlier research has shown that informative market feedback dominates the effects of cost-system design. In a multimarket context involving cost allocations, the present results suggest that cost-system refinement can play a significant role in price-setting, even in the presence of informative market feedback. Specifically, ABC provides benefits over volume-based costing in market segments in which biased cost allocations produce accounting losses that hinder learning from superior competitors. Compared to these informative settings, additional evidence also shows that performance is negatively affected by less informative market feedback. Yet in less informative settings, ABC still outperforms traditional costing, presumably because it helps to filter irrelevant competitor feedback from the decision process.

Life Cycle Cost Modeling of Pumps Using an Activity Based Costing Methodology

2010 ◽  
Author(s):  
Laxman Yadu Waghmode ◽  
Anil Dattatraya Sahasrabudhe
Keyword(s):  
Life Cycle ◽  
Life Cycle Cost ◽  
Product Life Cycle ◽  
Business Environment ◽  
Life Cycle Costing ◽  
Activity Based Costing ◽  
Global Business ◽  
Product Life ◽  
Traditional Costing ◽  
The Cost

In order to survive in today’s competitive global business environment, implementation of life cycle costing methodology with a greater emphasis on cost control could be one of the convincing approaches for the manufacturing firms. The product life cycle costing approach can help track and analyse the cost implications associated with each phase of product life cycle. Life cycle costing (LCC) practices with traditional costing methods may provide results that have a severe deviation from the real product LCC as it focuses on the cost of materials, labor and a low portion of overheads apportioned by the absorption rate to the product. Activity based costing (ABC) has emerged as one of the several innovative and more accurate costing methods in recent years. It is based on the principle that products or services consume activities and activities consume resources that generate costs. Thus, the ABC system focuses on calculating the costs incurred on performing the activities to manufacture a product. This paper presents a LCC modeling approach for estimating life cycle cost of pumps using activity based costing method. The study was conducted in a large pump manufacturing company from India that has significant global standing within its industry. Firstly, all the activities and cost drivers associated with the life cycle of a pump have been identified. A methodology for LCC analysis using ABC is then developed and it is applied to two different pumps manufactured by the same industry and the results obtained are presented.

scholarly journals Descriptive and comparative study of the purchasing activity: a case study in a food company

2017 ◽  
Vol 14 (2) ◽  
pp. 265
Author(s):  
Letícia Miyuki Aida Endo ◽  
Murillo Costa Cerqueira ◽  
Gabriel Nery da Silva ◽  
Laiane Aparecida Soares Sena Nery ◽  
Luiz Teruo Kawamoto Júnior
Keyword(s):  
Comparative Study ◽  
Food Company

scholarly journals An Analysis of the Time-Driven Activity-Based Costing System in Foundation Higher Education Organizations

2021 ◽  
Vol 11 (2Pt2) ◽  
pp. 537-549
Author(s):  
Burçin Tutcu
Keyword(s):  
Higher Education ◽  
Cost Management ◽  
Vocational School ◽  
Activity Based Costing ◽  
Scarce Resources ◽  
Service Production ◽  
Costing System ◽  
Program Costs ◽  
Traditional Costing ◽  
Higher Education Organizations

Changes in globalization and technology have made the competition in the education sector more in-tense. This change in competition has reduced the profit margins of educational organizations. In order to maintain their market share and maintain their assets under these conditions, organizations have had to put greater stress on cost management. Today, cost management has moved beyond simply being a sub-system of accounting and has become one of the main tasks of business management. Higher education organizations need to use scarce resources effectively and efficiently to achieve their goals, develop long-term strategies, and maintain their existence. The extent to which resources are used by whom and for what time should be determined correctly. The outputs obtained during this process should be checked and interpreted correctly. This study was designed as a case study and conducted in a vocational school of a foundation university in Istanbul. The aim of this study is to examine the service production process in foundation vocational school with different costing methods and to compare the results. For this purpose, the costs of the vocational school for the 2016-2017 accounting period were calculated by using both the traditional costing method and the time-driven activity-based cost-ing method. These two methods were then compared to find out their degree of accuracy in calculating the program costs.

scholarly journals Perception of activity based costing in Australian universities

2011 ◽  
Vol 7 (2) ◽  
pp. 64-78
Author(s):  
Monir Zaman ◽  
Mohamed Elsayed
Keyword(s):  
Management System ◽  
Cost Management ◽  
Positive Association ◽  
Chief Financial Officers ◽  
Generic Model ◽  
Activity Based Costing ◽  
Strategic Cost Management ◽  
Cost Management System ◽  
Traditional Costing ◽  
Australian Universities

The study examines the perception of activity based costing (ABC) in Australian universities. Using a questionnaire survey, data was collected from twenty-six finance directors and/or chief financial officers in Australian universities. The perception of ABC implementation in Australian universities depends on many variables including the understanding of ABC, consideration of ABC as a strategic cost management system, the role of ABC in reduction of expenses, consideration of ABC as a valuable tool to enhance overhead cost allocation, and consideration of ABC as an effective strategic cost management system designed to incorporate the university’s critical input, output, and process variables resulting in value creation. The result of regression analysis provides significant and positive association between the decision to implement ABC in Australian universities and both the treatment of ABC as a strategic cost management system and the degree of both senior management and internal champion support. The findings indicate substantial differences in the allocation of the overhead costs between ABC and traditional costing systems. The result also reveals that many Australian universities using the ABC method receive benefits in improving cost reduction and better resource allocation with revenue surplus. Furthermore, the study develops a generic model of cost pools and drivers of ABC implementation in Australian universities.

scholarly journals The importance of IT in the adaption of Activity-based costing (ABC) in Higher Education Institutions (HEI)

2013 ◽  
Vol 8 (1) ◽  
pp. 1228-1238
Author(s):  
Jamalludin Helmi Hashim
Keyword(s):  
Higher Education ◽  
Higher Education Institutions ◽  
Two Dimensions ◽  
Perceived Usefulness ◽  
Management Tool ◽  
Activity Based Costing ◽  
University System ◽  
Branch Campuses ◽  
Significant Difference ◽  
Traditional Costing

This study intends to highlight the possible significant relationship that may exists between Information Technology (IT) in the perceived usefulness of Activity-Based Costing (ABC) information as compared to the traditional costing across three different campus clusters of higher education institutions (HEI) in Malaysia. The perceived usefulness of ABC was represented by two elements, namely i) quality, and ii) functionality of costing system. The respondents were selected using disproportionate stratified random sampling method among the users of costing information in the biggest public university in Malaysia with a multi-campus university system. Among the twelve branch campuses across the country, the data was collected using structured postal questionnaires that were distributed to 96 respondents. The result indicated that there is no significant difference of perceived usefulness of information produced by ABC system across all three type campus clusters under study. Furthermore, statistical analysis also shown that there is no statistically significant interaction across three types of campus clusters to affect Perception of Usefulness (POU). As the findings from this study found to be contradict from the previous studies , these might be due to the nature of a multi-campus university system which practising the centralised administration across all branch campuses. In addition to that, unlike previous studies, this study extended the applicability of IT in two dimensions of university administrations, i.e., as a support system for administration and as a management tool.

scholarly journals INTEGRATING ABC AND EVA TO EVALUATE INVESTMENT DECISIONS

2017 ◽  
Vol 20 (1) ◽  
pp. 87-95
Author(s):  
N. Chiadamrong
Keyword(s):  
Business Performance ◽  
Economic Value ◽  
Investment Decisions ◽  
Value Added ◽  
Considerable Change ◽  
Cost Data ◽  
Activity Based Costing ◽  
Significant Information ◽  
Corporate Strategies ◽  
Traditional Costing

 The significance of investment is transparent in the world of competitive business. Traditional costing systems in which their emphasizes are for short term savings rather than long term benefits have shown some lacking in providing accurate and reliable cost data for the investment decisions. Activity-based Costing (ABC), which is developed to satisfy some of the weaknesses of the traditional costing systems, can provide valuable insights into the operating processes and come up with more accurate cost data. In this paper, ABC is used to provide significant information for investment decisions. Although, the ABC method provides accurate operating product costs, it does not identify which products are economic valued added creators and so contribute to companies’ wealth. This drawback can be overcome by applying Economic Value Added (EVA). The adoption of ABC and EVA can represent a considerable change in the managerial thinking and to corporate strategies and business performance.  

scholarly journals Time-Driven Activity-Based Costing in the Assembly Industry

2020 ◽  
Vol 14 (4) ◽  
pp. 3-23
Author(s):  
Olga Vedernikova ◽  
Lorena Siguenza-Guzman ◽  
Johanna Pesantez ◽  
Rodrigo Arcentales-Carrion
Keyword(s):  
Printed Circuit Boards ◽  
Critical Role ◽  
Unit Cost ◽  
Labor Cost ◽  
Circuit Boards ◽  
Manufacturing Companies ◽  
Activity Based Costing ◽  
Accounting Systems ◽  
Costing System ◽  
Traditional Costing

Costs and their determination play a critical role in all manufacturing companies. The traditional costing system has received criticism resulting from the arbitrary allocation of indirect manufacturing costs. As an important initiative to address its weaknesses, new costing methods such as the Time-Driven Activity-Based Costing (TDABC) have emerged. Unfortunately, up to our knowledge, no investigations have been applied in analyzing assembly companies thoroughly nor considering all the processes necessary to obtain the final products. This article explores the TDABC application in the assembly industry through comparison with traditional volume-based costing by focusing on manual and semi-automatized production. Since the research is descriptive, a multiple-case study design was implemented in the assembly of televisions, motorcycles, and printed circuit boards. The developed methodology allowed determining the existence of factory overhead and direct labor cost variances between two different cost accounting systems, which also affected the unit cost of the products. Findings also highlight the benefits of TDABC application in the assembly industry, along with the shortcomings and future potential of research in this area.

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