Reading

on ABC

Cooper, R. and Kaplan, R. (1988) How Cost Accounting Distorts Product costs,
Management Accounting, 69(10), pp. 20-27

See Papers notes

Kutcha, D. and Troska, M. (2007) Activity Based Costing and Customer
Profitability, Cost Management, 21(3), pp. 41-47.

Often need to do ABC for customers- 80% of customers arent profitable,
only 20% are- so if you can identify this is good
The best customers wanted standard delivery, paid on time, placed large
orders and received moderate discounts
Costs less to get a bad customer into a good one than to find one-
understand drivers of customer profitability
Management isnt about guessing

Stratton, W. O., Desroches, D., Lawson, R.A., Hatch, T., (2009) Activity-based
costing: is it still relevant? Management Accounting Quarterly, 10 (3), pp. 31-40.

Many companies abandoned ABC as costly, too simple and too expensive
Benefits of ABC include: product decisions, product profitability analysis,
operational improvements, budgeting
ABC solves: allocate costs, resource use, information and system updated
Still part of internal value chain for many, managers believe overhead
allocation lacking in NON ABC, ABC stop concerns listed above, ABC helps
in finance operations and strategy decisions, ABC better integrated into
budget and customer decisions

Kaplan, R. S. and Anderson, S.R. (2004) Time-Driven Activity-Based Costing,
Harvard Business Review, November, pp. 131-138.

See Papers notes

Carr, L. (1993) Unbundling the Cost of Hospitalization, Management Accounting
(Search under Strategic Finance), November, pp. 43-48.

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Max, M. (2004) ABC Trends in the banking sector A practitioners perspective,
Journal of Performance Management, 17 (3), pp. 23-50.

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Manning, K.H. (1995) Distribution Channel Profitability: ABC concepts can help
companies make strategic decisions, Management Accounting (Search under
Strategic Finance), January, pp. 44-48.

 See Papers notes

Major, M. (2007) Activity-based Costing and Management: A Critical Review,
chapter 8 in Hopper, T, Scapens, R and Vorthcott, D. Issues in Management
Accounting 3rd ed., pp.155-174.

ABC hasnt really improved competitiveness
Tempting to lie when saying time taken or if going to affect position in
organisation
Is this just consultant-led?
ABC needs no joint processes, and linear costs- is this realistic?
It does show resource consumption better through cost pools, not just
volume based, ensures that complex processes get more resources
Can look at which products produce overhead costs and which activities-
help managers control
Is it that big?

Provost, T. (2013) How DHLs Big Data Boosts Performance, January 30, 2013,
CFO.com

DHL didnt used to know per shipment costs- therefore customers
promising undeliverable business volumes- needed data
Invested in INSIGHT which is ABC system and massive improvement in
performance- highly competitive market, data is the edge