Departmental activity-based management

Article Abstract:

The departmental activity-based management (DABM) cost accounting system improves on the activity-based management (ABM) system by integrating the latter with departmental information. ABM is not very popular because of its radical departure from traditional accounting systems in the way it gathers, reports and analyzes information. Unlike traditional systems, ABM does not take into account functional or departmental information. DABM makes ABM easier to adopt because it can be built upon the organization's existing costing system. The new method has several advantages over ABM. It is flexible, does not differ too dramatically from traditional costing systems, eliminates unnecessary assignments to plantwide activities, and can generate departmental costs. In addition, DABM provides additional information not available from ABM, such as those on department activities, cost drivers and cost driver rates.

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Six problems in accounting for N-C machines

Article Abstract:

Preliminary findings concerning cost accounting problems encountered by several companies in numerical control (N-C) machines are discussed, as presented by the National Association of Accountants' research project 'Cost Accounting for Factory Automation'. The problems discussed involve: difficulties in the identification of wages of machine operators as direct or indirect labor, direct labor is becoming less variable and increasingly fixed, hard-to-quantify benefits derived from N-C machines, emphasis of short-term (versus long-term) results, inaccurate overhead allocations which cause poor decisions, and difficulty in measuring the performance of N-C machines.

Research, Manufacturing industry, Manufacturing industries, Finance, Technology application, Manufacturing processes, Manufacturing, Products, Factories, National Association of Accountants

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Will the real cost please stand up?

Article Abstract:

A fictional account is given to describe the accounting treatment for allocated variable costs in order to demonstrate that management accountants should place more emphasis on the prime goal of business, which is to make money. Cost accounting systems should be more forward directed (and not solely concerned with historical operating and overhead costs), while the cost accounting methods followed must differentiate between fixed costs and variable costs, as well as between direct and allocated variable costs. These issues are discussed by implication in the fictional case study.

Analysis

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