A framework for the design and audit of an activity‐based costing system

A framework for the design and audit of an activity‐based costing system The objective of a cost management system is to provide accurate and useful information to help companies in utilizing their valuable resources for producing quality goods and services in a competitive environment. Activity‐based costing (ABC) has been found more appropriate for capital intensive manufacturing environments. However, there is no systemic framework for design and implementation of ABC. Realizing the importance of ABC, an attempt has been made in this paper to develop a framework for the design of an ABC system. It is based on the review of literature on the design and implementation of ABC. In ABC, the activities required to manufacture a product should be identified and then quantified by their consumption of resources. The cost of each activity that is required to produce the product/parts will be calculated in such a way that the factors causing or driving the cost (cost drivers) of the activity in question can be determined. The cost driver rate will be used to allocate the cost of activities to a product/part according to the volume of the cost driver. In addition, the advantages and limitations of ABC are also discussed. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Auditing Journal Emerald Publishing

A framework for the design and audit of an activity‐based costing system

Managerial Auditing Journal, Volume 14 (3): 10 – Apr 1, 1999

Loading next page...
 
/lp/emerald-publishing/a-framework-for-the-design-and-audit-of-an-activity-based-costing-we14XWi7Nx
Publisher
Emerald Publishing
Copyright
Copyright © 1999 MCB UP Ltd. All rights reserved.
ISSN
0268-6902
DOI
10.1108/02686909910259095
Publisher site
See Article on Publisher Site

Abstract

The objective of a cost management system is to provide accurate and useful information to help companies in utilizing their valuable resources for producing quality goods and services in a competitive environment. Activity‐based costing (ABC) has been found more appropriate for capital intensive manufacturing environments. However, there is no systemic framework for design and implementation of ABC. Realizing the importance of ABC, an attempt has been made in this paper to develop a framework for the design of an ABC system. It is based on the review of literature on the design and implementation of ABC. In ABC, the activities required to manufacture a product should be identified and then quantified by their consumption of resources. The cost of each activity that is required to produce the product/parts will be calculated in such a way that the factors causing or driving the cost (cost drivers) of the activity in question can be determined. The cost driver rate will be used to allocate the cost of activities to a product/part according to the volume of the cost driver. In addition, the advantages and limitations of ABC are also discussed.

Journal

Managerial Auditing JournalEmerald Publishing

Published: Apr 1, 1999

Keywords: Activity‐based costing; Implementation; Systems design

References

  • On the applicability of activity based costing as a planning
    Schneeweiss, C

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off