A structured approach to implementing ABC

Article Abstract:

Corporations can implement activity-based costing (ABC) systems in four to six months for less than $100,000. Before the implementation of an ABC system, six major decisions must be made, including whether the system should be stand-alone or integrated, whether there should be a formal design, who owns the system, what level of precision the system should have, whether the system should report future or historical costs, and how complex the design of the system should be. An implementation plan that can be used has seven phases: an ABC seminar, a design seminar, data gathering and design, meetings for calibrating progress, an executive seminar, a results meeting, and interpretation-of-results meetings.

Accounting, Technology application

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ABC: the right approach for you?

Article Abstract:

Activity-based accounting (ABC) systems, which trace costs to cost divers, more accurately measure the costs of manufactured goods than traditional cost accounting systems. Firms anticipating a switch from traditional cost accounting systems to an ABC system must determine whether the benefits of an ABC system will exceed the costs of implementing the ABC system. The factors that will have to be considered when determining whether an ABC system is appropriate are the sophistication of the firm's information system, the cost of errors, and the diversity of the firm's products.

Measurement, Prices

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