...Isa becoming more and more popular [3-7] ABC aims to provide accurate costing information to managers to allocate activity costs to products and services by applying cost drivers [8]. Academics who advocate ABC, such as, Cooper and Kaplan [9], and Swenson [10] argue that it provides more accurate cost data needed to make appropriate strategic decisions about product mix, sourcing, pricing, process improvement, and evaluation of business process performance. These claims have led many firms to adopt ABC systems [8]. The benefits of ABC and its positive impact on firm’s performance motivated a numerous studies which examined various aspects of ABC. Among such studies are McGowan [11] who assessed the integrity of ABC success, Innes and Mitchell [4, 12] and Yanren [13] who conducted research on factors affecting ABC adoption, and Shield [3], Shields and McEwen [14], Gosselin [15] and Baired et al.[16, 17]who concentrated on factors influencing ABC success especially at the implementation stage. However, there is mounting evidence that suggests most of firms are experiencing problems in implementing ABC and, in some extreme cases, ABC implementation is not successful [3], which later resulted in abandoning the ABC systems altogether [15]. Questions arise as to why ABC implementation is successful in certain companies and fails in others. Based on the contingency theory, researchers have argued that the reasons for different degrees of ABC success could be due to the different contextual...
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...Isa becoming more and more popular [3-7] ABC aims to provide accurate costing information to managers to allocate activity costs to products and services by applying cost drivers [8]. Academics who advocate ABC, such as, Cooper and Kaplan [9], and Swenson [10] argue that it provides more accurate cost data needed to make appropriate strategic decisions about product mix, sourcing, pricing, process improvement, and evaluation of business process performance. These claims have led many firms to adopt ABC systems [8]. The benefits of ABC and its positive impact on firm’s performance motivated a numerous studies which examined various aspects of ABC. Among such studies are McGowan [11] who assessed the integrity of ABC success, Innes and Mitchell [4, 12] and Yanren [13] who conducted research on factors affecting ABC adoption, and Shield [3], Shields and McEwen [14], Gosselin [15] and Baired et al.[16, 17]who concentrated on factors influencing ABC success especially at the implementation stage. However, there is mounting evidence that suggests most of firms are experiencing problems in implementing ABC and, in some extreme cases, ABC implementation is not successful [3], which later resulted in abandoning the ABC systems altogether [15]. Questions arise as to why ABC implementation is successful in certain companies and fails in others. Based on the contingency theory, researchers have argued that the reasons for different degrees of ABC success could be due to the different contextual...
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...Reference |Issue investigate |Method of data collection |Main finding | | |1. Amriks Sohal and Walter W.E chung |Extent of implementation of ABC |Books |The ratio of adopting ABC | | |system |use of data of different |How do firms consider ABC system | |Activity based costing in |Earlier experience of ABC system |survey |CIMA research on ABC system | |manufacturing: |ABC implementation case studies |Journals |Detail case study of two | |two case studies |comparison & conventional costing |articles |companies | | |system |Different case studies | | |Year 1998 | | | | |Page 137-147 | | | | |2. "Activity-Based Costing." |The structure of ABC and its pit |Study of research magazine & |Potential pitfalls of activity | |Encyclopedia of Small Business. Ed. |falls |article |based...
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...Requirements Discuss the advantages and disadvantages of using an Activity Based Costing (ABC) over other costing systems. Also identify at least one company that uses ABC and describe how it benefits the company. Introduction This paper has been formulated in order to determine the basic nature of Activity Based Costing, its advantages and disadvantages. These points are further elucidated by a case study of a Taiwanese hot spring country inn’s implementation of the ABC system. What is Activity Based Costing The Activity-Based Costing theory started in 1987 by Robert S. Kaplan and W. Bruns as a better alternative to the traditional costing method. It has activities as the fundamental cost objects and assumes that activities cause costs and that cost objects create demands for the activities. A traditional costing system uses a single, volume based cost driver. In most cases the traditional system assigned the overhead cost to products on the basis of their usage of direct labor. For this reason traditional cost systems often yields inaccurate product costs and becomes inadequate in terms of calculating true cost to produce specific products for specific customers. ABC system was developed to overcome the shortcomings of the traditional method by using many cost drivers to allocate a indirect costs instead of just using one cost driver such as machine hours. ABC system uses a different approach and allows improvement on the control of overheads by cost/cause relationships...
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...Betty W. Steadman 135 IMPLEMENTING THE ACTIVITY BASE COSTING SYSTEM: A CASE STUDY ON DAKOTA OFFICE SUPPLY By Betty W. Steadman Overview Activity Based Costing (ABC) is an accounting method that allows an organization to determine actual costs associated with each product and/or service produced by the organization without regard to the organizational structure or other extraneous function. For Dakota Office Products (DOP), its existing costing system was inadequate because it is incapable of accounting for even all of the known costs such as the desktop delivery service as well as hidden costs such as the 10% DOP paid to maintain its working capital line of credit for accounts receivable (Kaplan, 2003, p.4). Since ABC is a powerful tool for measuring performance, identifying, describing, and assigning costs to, and reporting on an organization’s operations it could solve much of DOP’s critical cost oversights (Caplan, Melumad & Ziv, 2005). Used holistically ABC can be utilized to also improve processes and identify opportunities to improve business effectiveness and efficiency by determining the true or real costs of a given product or service. ABC principles are used to focus management’s attention on the total cost to produce a product or service, and as a basis for full cost recovery of a production or service process. Situational Analysis DOP is a regional office supply company with a strong reputation for customer service and quality supplies. Additionally...
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...Case Study on Carl Robins Carolyn Joel COMM/215 July 28, 2014 Dr. Yolanda Orizando-Harding Case Study on Carl Robins BACKGROUND INTRODUCTION This case study pertains to an employee by the name of Carl Robins. He has been employed by ABC, Inc as a Campus Recruiter for six months. In early April, during Mr. Robins first six months of employment; he successfully recruited 15 new hires. The new trainees were to report to Monica Carrolls, the Operations Supervisor, as they would be working under her. (University of Phoenix, 2014) This case study analysis of Mr. Robins is in relation to the numerous issues that transpired between April and June 15th. To obtain a clear understanding of the complications that transpired, the company believes that it would be in their best interest to consult a firm to look into the company’s issues and to help solve the problems that have emerged; this may be the most effective method to identify and recommend ways to improve ABC, Inc.’s recruiting of new trainees. I. ISSUES THAT TRANSPIRED The consulting firm came into ABC, Inc. and thoroughly examined background information on the situation. There were many key problems that had been identified during the evaluation. The issues that ABC, Inc. was facing were centered on Mr. Carl Robins, ABC, Inc.’s Campus Recruiter and also on the company ABC, Inc. To begin, Mr. Robins has been with the company merely a short six months. The consulting firm believes that Mr. Robins...
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...THE APPLICATION OF INNOVATIVE MANAGEMENT ACCOUNTING PRINCIPLES FOR ENHANCING PROFITABILITY AND COMPETITIVENESS: AN EXPLORATORY STUDY OF JAMAICAN MANUFACTURERS Phillip C. James University of Technology, Jamaica College of Business and Management School of Business Administration ABSTRACT This study represents the first in management accounting research in Jamaica which seeks to determine the extent to which innovative management accounting principles (IMAPs) are applied in the manufacturing sector. The aim is to determine if manufacturers in Jamaica are using IMAPs to improve export competitiveness and enhance profitability .The study also seek to determine the factors that prevent manufacturers from adopting these management accounting principles. Five manufacturing organizations were examined using an exploratory case study approach. Results indicate that companies adopting IMAPs have more reliable information for decision making, higher levels of profitability and competitiveness when compared with non- adopting companies. Key Words: Innovative Management Accounting Principles, Profitability, Competitiveness 1. INTRODUCTION The manufacturing environment of the twenty-first century has changed considerably when compared with what existed decades ago. Arising from this development and with the increase in global competition, the need for accurate cost information has become an imperative. Manufacturers worldwide have suddenly realized that the continued...
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...The implementation of Activity Based Costing (ABC) in Chinese refining manufacturers Table of contents 1. Introduction 2 1.1 Research background 2 1.2 domestic and foreign research status 4 1.2.1 Activity-based costing development process 4 1.2.2 Status quo of Activity-Based Costing Development and Application in China 6 1.3 research contents 8 2. Related theories 9 2.1concept of ABC 9 2.2 rationales 10 2.3 difference between ABC and traditional costing 12 2.3.1. Different calculating targets 12 2.3.2 Different calculation 12 2.3.3. Different Finished goods costs term 13 3. Research methodology 13 3.1 case study 13 3.2 The survey method 13 3.3 Literature 14 4. Research Results 14 4.1 problems of traditional costing method in oil refining enterprise 14 4.2suggestions for Chinese enterprises’ application ABC 15 Bibliography 15 1. Introduction 1.1 Research background With the rapid development of the national economy, enterprises’ competition is increasingly fierce; many companies are using advanced science and technology to achieve competitive advantage in the market. Market competition and technological progress are the two fundamental economic factors which generate activity-based costing. Since The beginning of 1980s of the 20th century, the activity based cost method is paid a wide range of attention; the developed countries gradually adopt it in a number of advanced enterprises...
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...Supply chain management Time context Success Inc, as per the provided case, is a manufacturing entity that sources for its raw materials from ABC GmbH (O¨ string). The firm is wishes to start producing a new product in the future with the only problem being that there is uncertainty in relation to whether ABC GmbH has the capacity to produce the components needed in the manufacture of the new product (O¨ string). The main concern is that the supplier doesn’t have adequate production capacity to manufacture large volumes of the required components. Even though ABC GmbH has plans to acquire bigger production facilities, the company doesn’t have sufficient financial resource to make the investment (O¨ string). The implication is that Success Inc will have to fund the supplier in acquiring and installing the new production lines. The telephone conversation between Jack Smith, Success Inc’s production manager and Jill Turner reveals that the firm risks experiencing a production crisis as a result of ABC GmbH financial inefficiencies. There is need to come up with immediate solution or else the proposed production of the new products will be put into jeopardy. View point Success Inc analysis of its supplier takes the approach of ascertaining the manufacturing capabilities of the company. This is of great importance considering that Success Inc expects ABC GmbH to produce large volumes of the components which will be used in making the firm’s new products (O¨ string). When Jack...
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...In this research note we will discuss strengths and weaknesses in the design of this study, and propose ways to deal with the weaknesses in a follow-up study. We will address two themes; generalizability and reliability/validity. Generalizability Generalizability theory is mainly used as a tool to conceptualize and design reliable data. (Brennan 2001) If we want to operationalize generalizability than generalizability would be an extension of your conclusions from for example a small survey to a much larger population. Applying this on case studies, Mills, Durepos and Wiebe (2010) say generalizability refers to the ability of extending the validity of one's case study conclusions to other cases of the kind. In his paper, Malmi actually uses the term theoretical generalization and defines it as the explanations generated from this and other case studies that will help ABC failure as a phenomenon to become understandable. In order to achieve this, Malmi explicitly illustrates the different interests of organizational stakeholders, different purposes for the use of ABC and describes political, economic and cultural influences on ABC implementation. Due to the multiple factors affecting ABC implementation, Malmi described ABC failure in a broad context such that his conclusion is easier transferable to other organizations. Reliability and validity In the context of quantitative studies, reliability can be defined as the extent to which evidence is independent of the person...
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...Wilkerson Company Case: Wilkerson Company In the case, we have review the allocation of overhead by using Traditional Cost Accounting (TCA) and Activity Based Costing (ABC) in a manufacturing company named Wilkerson. Through the case study, I have learnt the importance of Cost Accounting System, the principles of TCA and ABC, the advantages and disadvantage of ABC, the practical use of ABC and cost reduction using ABC. 1. Importance of Cost Accounting System. Through the case study, I learnt that a proper Cost Accounting System is very important in a company. Without the accurate system, a company is unable to maximize the profit from the product sold. The product price might be charged too high (over-priced) or too low (under-priced). All these will eventually affect the profitability and revenue as it is actually making very minimum profit or even having loss by selling under-priced product and also might find difficulty to market its over-priced product. Indeed, with the accurate cost accounting system, the company can maximize the profit by setting the appropriate price and compete in the market, or the company can even identify the highest profit-generating product and concentrate their marketing promotion on it. 2. Principles of TCA and ABC. By studying the case, I also learnt the cost accounting system had evolved from TCA to ABC. The TCA method assumes that all products indirect cost is only driven by one cost driver which is number of direct labour. The allocation...
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...Technical Writing Project Cover Sheet Capstone Proposal Project Name: Upgrading ABC Inc. Internet Edge Student Name: Michael Wakefield Degree Program: Bachelor of Science IT-Security Mentor Name: Signature Block Student’s Signature Mentor’s Signature Table of Contents Capstone Proposal Summary 1 Review of Other Work 8 Rationale and Systems Analysis 16 Goals and Objectives 22 Project Deliverables 26 Project Plan and Timelines 27 References 28 Appendix 1: Competency Matrix 4 Capstone Proposal Summary Internet of Everything (IoE) and “Big Data” equates to competitive advantages to the modern business landscape. Numerous white papers are circulating on the Internet highlighting the business case supporting the IoE initiative. For instance, in a white paper conducted by Cisco Inc. on the Value Index of IoE in 2013 reported the following: In February 2013, Cisco released a study predicting that $14.4 trillion of value (net profit) will be at stake globally over the next decade, driven by connecting the unconnected –people-to-people (P2P), machine-to-people (M2P), and machine-to-machine (M2M) - via the Internet of Everything (IoE). Cisco defines the Internet of Everything as the networked connection of people, process, data, and things. The IoE creates new “capabilities, richer experiences, and unprecedented economic opportunity for businesses, individuals, and countries” (The Internet of Everything, Cisco, Inc. 2014). With such a...
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...Case Study for Student Analysis: ABC,Inc. Letty Gutierrez Comm 215 12/15/2011 Kelly Brooks Case Study for Student Analysis: ABC,Inc. Introduction ABC Inc. is a locally owned family company who takes pride in their prompt service, excellent customer service and A1 quality products. Due to their recent expansion, and production at its all-time high more employees are needed to take this on. In order for this to take place ABC has confided in Operations Supervisor Monica Carrols to assist with this transition. Monica has over 20 years under her belt with ABC and has the qualifications to get this task done. Since Monica is overseeing the operations, and has Carl Robins as part of her management team, together they should be able to come up with an excellent game plan to make this happen. Case Background ABC Inc. recently hired a new campus recruiter. His name is Carl Robins. He has been with the company for about six months. His first recruitment task is to hire 15 new trainees to work for Monica Carrolls. He is left with many responsibilities which include: drug tests, physicals, booklets, orientation manuals, and a training schedule. Ideally Monica would like to have these new hires on board and ready for work by July. It is Carl’s responsibility to make sure all these tasks are completed and the new hires are on board with ABC Inc. With Monica being gone on vacation he is left with a deadline he must meet in order to keep the production running...
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...Source: http://www.allbusiness.com/accounting-reporting/methods-standards-cost-accounting/498244-1.html#ixzz1nMWBS5qI By Juras, Paul E. ABSTRACT Descriptions of activity-based-costing (ABC) systems have become a standard part of managerial accounting texts. While ABC implementation issues are the focus of a number of articles, these issues are often not addressed in a typical textbook. This case is designed to familiarize you with the behavioral and technical variables that can aid or impede successful ABC implementation. Anderson's (1995) factor-stage model provides a template to organize the discussion of ABC success factors. In this case, you will be cast in the role of a business consultant. You are asked to synthesize the case study's key "change management" insights into a report that could be shared with co-workers in an intranet-based knowledge management system. In addition, you may be expected to prepare a formal presentation of the report for your peers. Implementing change in an organization is about ninety percent cultural and ten percent technical. This is because the organization dynamics, politics, and search for a champion that go on are the real issues that make or break the project. One of the reasons we were able to implement ABC successfully was because the right people became champions. Chris Richards, Director of MIS, Global Electronics, Inc. BACKGROUND Global Electronics, Inc. (GEI), headquartered in Sarasota, Florida, designs, manufactures...
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...The current issue and full text archive of this journal is available at www.emeraldinsight.com/0951-3574.htm AAAJ 21,2 Strategic management accounting: how far have we come in 25 years? Kim Langfield-Smith Monash University, Melbourne, Australia Abstract Purpose – The purpose of this paper is to provide a review of the origins of strategic management accounting and to assess the extent of adoption and “success” of strategic management accounting (SMA). Design/methodology/approach – Empirical papers which have directly researched SMA and prior review papers of the adoption and implementation of SMA or SMA techniques are reviewed. As well as assessing the extent of adoption of SMA and the reasons underlying an apparent low adoption rate, the role of accountants in adopting and implementing SMA is considered. Finally, the success or otherwise of SMA is discussed. Findings – SMA or SMA techniques have not been adopted widely, nor is the term SMA widely understood or used. However, aspects of SMA have had an impact, influencing the thinking and language of business, and the way in which we undertake various business processes. These issues cut across the wider domain of management, and are not just the province of management accountants. Research limitations/implications – There is limited value in conducting future surveys of the adoption and implementation of SMA or SMA techniques. Rather, the focus should be on how SMA-inspired techniques and processes diffuse into general...
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