A Procedure for Smooth Implementation of Activity Based Costing in ...

A Procedure for Smooth Implementation of Activity Based Costing in Small
Companies
Narcyz Roztocki
State University of New York at New Paltz / Department of Business Administration
75 South Manheim Boulevard, New Paltz, NY 12561
914-257-2930 (phone); 914-257-2947 (fax)
roztockn@matrix.newpaltz.edu
Jorge F. Valenzuela
José D. Porter
Robin M. Monk
Kim LaScola Needy
University of Pittsburgh / Department of Industrial Engineering
1041 Benedum Hall, Pittsburgh, PA 15261
412-624-9838 (phone); 412-624-9831 (fax)
kneedy@engrng.pitt.edu
Abstract
direct labor. These traditional costing systems tend to
This paper describes a procedure that allows small
distort product costs and lead to poor strategic decision-
companies to smoothly switch from a traditional costing
making (Johnson and Kaplan, 1987; Johnson, 1987;
system to an Activity Based Costing system at low risk
1991).
and with minimal investment. The paper focuses on any
One innovative costing method designed to deal
type of small company (less than 100 employees) for
with the deficiencies of traditional costing systems is
which the standard implementation of Activity Based
Activity Based Costing (ABC). ABC, pioneered by Robin
Costing is too expensive and complex. The
Cooper, Robert Kaplan, and H. Thomas Johnson (Cooper,
implementation guide leads a company step-by-step
1988a; 1988b; 1990; Cooper and Kaplan, 1988; Johnson,
through Cooper’s two-stage activity based cost system
1990), is a costing methodology used to trace overhead
model. The complete implementation procedure consists
costs directly to cost objects, i.e., products, processes,
of eight major steps. At first, decision-makers choose
services, or customers and help managers to make the
among three methods, educated guess, systematic
right decisions regarding product mix and competitive
appraisal, or actual data collection, for obtaining cost
strategies. According to Turney, ABC can radically
information. At this stage, the decision-makers determine
change how managers determine the mix of their product
the level of accuracy that is needed and the amount of
line, price their products, identify the location for sourcing
money to be assigned to this project. Next, the overhead
components, and assess new technology (Turney, 1989).
expenses such as administration, rent, utilities, and
Although the literature has reported numerous
transportation are compiled into product cost information
implementations of ABC in large manufacturing firms,
using newly developed matrices. Using these matrices,
there has been limited accounting of ABC being embraced
cost related calculations are simplified and thus the
by small manufacturing firms (less than 100 employees)
overhead costs are easily traced to the cost objects in the
(Needy and Bidanda, 1995; Bharara and Lee, 1996). Upon
final step. The easy-of-use of the proposed procedure is
closer examination, there appears to be several factors
illustrated using actual data from a small tool & die
preventing small manufacturing firms from implementing
manufacturing company.
an ABC costing system including lack of data, technical
resources, financial resources, and adequate
Keywords
computerization. Perhaps the main obstacle, lack of data,
Activity-Based Costing, Small Business
centers on the problem of collecting and processing the
needed data in the correct format at a reasonable cost.
Introduction
Because the information needed for ABC is costly and
Manufacturing firms face ever-increasing competition in
small manufacturing firms are typically constrained
today’s global marketplace. Companies must react
financially, these companies need to be very selective in
quickly and manufacture high quality, low cost products to
the type of data and analysis that they use to determine
be successful in this new environment. To make proper
overhead costs. Moreover, small businesses operate
decisions, senior managers must have accurate and up-to-
uniquely, a condition referred to as resource poverty, that
date costing information. Traditional costing systems
requires specialized cost management approaches (Welsh
based on volume-based allocation of overhead have lost
and White, 1981). Thus, a methodology that will enable a
relevance in a manufacturing environment that has seen a
small company to obtain accurate product cost information
sharp increase in overhead and a subsequent decline in
yet minimize financial effort is needed.

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Exhibit 1. Relationship among expense categories, activities, and products.
Expense 1
Expense 2
Expense 3
FIRST
Cost driver
Cost driver
Cost driver
STAGE
Activity 1
Activity 2
Activity 3
Cost driver
Cost driver
Cost driver
SECOND
STAGE
Product 1
Product 2
In this paper, an efficient and inexpensive
are determined to allocate overhead to individual products.
method for implementing ABC in small business
Exhibit 1 illustrates the hierarchical relationship among
environments is proposed. This procedure systematically
expense categories, activities, and products.
provides the decision-maker with accurate cost

The proposed methodology assumes that the
information to establish corporate strategies, determine
overhead cost and its categorization are available,
product cost, and improve the cost structure.
generally from accounting. Expense categories refer to
the traditional way in which a company divides
Activity Based Costing
manufacturing overhead. This information will assist the
Cooper describes two stages in the ABC model (Cooper,
company in validating that the total overhead calculated at
1987a; Cooper, 1987b). In the first stage, costs are
the beginning of the process matches the total obtained
assigned to cost pools within an activity center, based on a
when summing the overhead that is assigned to each
cost driver. There is no equivalent step in a traditional
individual product using ABC.
costing approach. In the second stage, costs are allocated

from the cost pools to a product based on the product’s
Identifying activities or cost pools
consumption of the activities. This stage is similar to a

In order to implement ABC, the complete business
traditional costing approach except that the traditional
process should be divided into a set of activities. A
approach uses solely volume related characteristics of the
flowchart of the process is a commonly used tool for
product without consideration for non-volume related
identifying these main activities. Each box represents
characteristics. Some examples of cost drivers not related
activities and arrows denote the flow of the system. Thus,
to volume include setup hours, number of setups, ordering
in order to establish the needed activities for ABC,
hours, and number of orders. Allocating non-volume
homogeneous processes must be grouped together. In
related costs using volume-based methods distorts the
other words, product driven activities and customer driven
product costs.
activities must be separated in order to establish two
individual homogeneous activities. Examples of activities
Methodology
for manufacturing companies are quote preparation,

In the ABC model, overhead expense categories such as
production supervision, and material handling.
administration, rent, transportation, and insurance are

identified. This cost data can be obtained easily from
Activities and first stage cost drivers
accounting. The next step is to determine the main

Once the main activities have been defined, a total cost of
activities that simplify the tracing of cost information.
each activity can be calculated. First, the expense
This can be accomplished by grouping actions into
categories related to each activity are identified. For
activities and activities (or cost pools) into activity centers
example, the activity cost for “quote preparation” includes
using the ABC approach. Some examples of activities for
costs from various expense categories such as salary, rent,
a small manufacturing company are receiving a customer
utility, and office supplies. To properly trace the expenses
inquiry, customer quotes, production supervision, and
to each activity, cost drivers, also called first stage cost
shipping products. Expenses are going to be assigned to
drivers, have to be identified for each expense category.
the previously defined activities via the first stage cost
For instance, the expense category “rent” associated with
drivers. Following the second stage, activity cost drivers
the activity “quote preparation” may be driven by square

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feet, whereas, the expense category “salary” may be driven
product. At this step it is important to determine an
by the amount of time the employee spends on this
appropriate cost driver in order to achieve the desired
activity.
level of accuracy. For example, suppose we wish to trace

the sales cost pool to each product. One approach is to
Second Stage Cost Drivers
estimate the level of sales activity needed for each of the
In the second stage, activities are traced to products using
individual products. Let assume the following scenario: a
second stage cost drivers. As with first stage cost drivers,
company produces five products. Product A is a very well
data needed for second stage drivers may not be readily
established product requiring minimal effort from the
available to represent the proportion of cost pools that
sales representatives when they talk to potential
correspond to the products. For instance, mileage can be
consumers. On the other hand, products B, C and D are
difficult to trace to individual product. In the absence of
in the middle of their life cycle. Finally, product E, is a
actual data there becomes a need to estimate the amount of
new product that consumes a lot of time from the sales
activity cost consumed by each product.
representatives. Instead of allocating an equal amount of
sales expenses to each one of the products, AHP can
Information Gathering Procedures
provide an estimation that can allow the company to more

Gathering information is essential in order to achieve
accurately trace this cost to the products. The methodology
accuracy of final product costs. An important part of the
followed by AHP requires first determining factors that
required data is the proportions needed in each stage of an
account for cost relationship between activities and
ABC costing system. Each activity consumes a portion of
products. In this specific illustration, locations of travel for
an expense category. Similarly, each product consumes a
sales and time spent with the client discussing each
portion of an activity. As discussed previously, a
individual product may be some examples of these factors.
proportion usually represents this portion. For instance,
Secondly, the sales representative assigns a ranking
the activity “quote preparation” consumes 0.1 (10%) of
among products according to the distance needed to
administration expenses. There are many ways to obtain
support them. A second raking among products is
these proportions and the selected procedure will impact
established in proportion to the time spent with the
the desired accuracy. Three levels of data accuracy can be
customer. Finally, the subjective rankings of sales
used in estimating these proportions: educated guess,
representatives are combined by AHP and ratios for sales
systematic appraisal, and collection of real data.
expenditure among the five products are obtained.

Educated guess
Actual data collection

In the case where real data can not be obtained or data
The most accurate and most costly procedure for
collection efforts can not be financially justified, an
computing proportions is the collection of real data. In
educated guess can be made in order to obtain proportions.
most cases, a data collection procedure must be developed
These guesses should be done collaboratively by
and data collection equipment may need to be purchased.
management, financial organizers, and operational
Moreover, collection of the data will need to be timely and
employees associated with the costing center of interest.
skilled collectors may be required. The results often have
This team can provide an educated guess of the
to be analyzed using statistical methods. For example, job
proportions of costs allocated in both stages of an ABC
sampling can be used to estimate the time proportion
costing methodology. The level of accuracy obtained is
dedicated to supervise the manufacturing of a particular
based on a combination of the teams’ diversity and their
product. In this case, the supervising engineer is asked, at
knowledge of the cost center of interest.
random time intervals, to specify the product being

currently supervised. Based on this data the needed
Systematic Appraisal
information can be obtained.
A more scientific way to obtain the proportions for tracing
costs is using a systematic technique such as Analytic
Proposed procedure for tracing overhead expenses to cost
Hierarchical Process (AHP) (Saaty, 1982; Golden, Wasil,
objects
and Harker, 1989). AHP is a suitable tool for pulling
subjective individual opinion into more representative
Step 1. Get the expense categories
information. For example, assuming that the allocation of
The initial step is to examine the expense categories
a gasoline expense is needed between three cost pools
included in the income statement of the company.
namely sales, delivery and maintenance. By questioning
the departments that consume this resource and by asking
Step 2. Identify main activities
them to evaluate what percentage of mileage they
Step 2 can be performed in parallel with Step 1.
accumulate in a certain period of time, AHP can generate
the percentage of this expense and allocate it to the
Step 3. Relate expenses to activities by establishing an
appropriate cost pool.
EAD matrix.
A second area in which AHP can be used is to
In this step, the activities that contribute to each expense
allocate the expense from the cost pool to each individual
are identified and the Expense-Activity-Dependence

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(EAD) matrix is created. The expense categories
Application Example
represent the columns of the EAD matrix, whereas the
In this section the overhead costs of a typical small
activities identified in Step 2 represent the rows. If the
manufacturing firm are traced using the proposed
activity i contributes to the expense category j, a check-
methodology. The example uses the average of actual
mark is placed in the cell i,j.
costs tabulated from several small-manufacturing
companies to represent the costs of a ‘typical’ small
Step 4. Replace check-marks by proportions in the EAD
business enterprise. Moreover, this approach also
matrix.
preserves the anonymity of the companies.
Each cell that contains a check-mark is replaced by a
Tool & Die Inc. is a small manufacturing
proportion which is estimated using any of the procedures
company in Western Pennsylvania that manufactures three
previously mentioned. Each column of the EAD matrix
main products and supplies to multiple customers. On-
must add up to 1.
going engineering work is prominent because of the use of
CNC machines to manufacture products. Ten main
Step 5. Obtain dollar values of activities.
customers are responsible for more than 80 percent of the
To obtain the dollar values of each activity the following
total business. Since its foundation 20 years ago, the Tool
equation is applied.
& Die Inc. has growth by adding three to five new
∑M
employees per year. Currently, its total work force is

=

TCA(i)
×

(j)

Expense
(i,

EAD

j)
(1)
nearly one hundred employees. Despite the growth in
=

j 1

company size and business volume, the profitability has
Where:
declined during the last few years. In the last two years,
TCA(i) = Total cost of activity i
the company experienced losses for the first time in its
M = number of expense categories
history. Management believes that costing by intuition or
Expense (j) = Dollar value of expense category j
by applying traditional methods is no longer appropriate.
EAD (i, j) = Entry i, j of Expense-Activity-
Therefore, they decided to introduce an ABC costing
Dependence matrix
system to the company. Because the data required for the
ABC system does not already exist and the cost to collect
Step 6. Relate activities to products by establishing an
all of it would be prohibitive for this firm, management
APD matrix.
decided to use educated guesses, systematic appraisal, and
In this step, the activities consumed by each product are
actual data.
identified and the Activity-Product-Dependence (APD)
The initial step was to examine the expense
matrix is created. The activities represent the columns of
categories included in the income statement of Average
the APD matrix, whereas the products represent the rows.
Inc and to select cost drivers. Exhibit 2 shows this
If the product i consumes the activity j, a check-mark is
breakdown. In the second step, Tool & Die Inc. identified
placed on the cell i,j.
its main activities and their respective second stage cost
drivers as shown in Exhibit 3. Exhibit 4 illustrates a
Step 7. Replace check-marks by proportions in the APD
hierarchical tree relating expense categories, activities and
matrix.
products. The third step determined which activities
Each cell that contains a check-mark is replaced by a
contributed to each expense category. For example, the
proportion which is estimated using any of the procedures
activities contributing to the expense category “Transport”
previously mentioned. Each column of the APD matrix
are material receiving and product shipment.
must add up to 1.
Step 8. Obtain dollar values of products.
To obtain the dollar values of each product the following
equation is applied.
(i)

OCP
∑N

=
×

(j)
TCA
(i,

APD

j)
(2)
1

=
j
Where:
OCP(i) = Overhead cost of product i
N = Number of activities
TCA (j) = Dollar value of activity j
APD (i, j) = Entry i, j of Activity-Product-
Dependence matrix
The procedure described can be easily implemented using
common standard spreadsheet software.

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Exhibit 2. Expense categories and their respective cost drivers
Expense category
Cost ( $)
Cost drivers
Administration
270,000
Time (hours)
Depreciation
180,000
Dollar use of resources ($)
Rent and utilities
150,000
Space (ft2)
Office expenses
70,000
Level of use of office resources (%)
Transport
50,000
Distance (miles)
Interest
45,000
Cost of the activity ($)
Product shipment
45,000
Weight (Lb)
Business travel
45,000
Distance (miles)
Business insurance and legal expenses
40,000
Cost of resource used by the activity ($)
Advertising
40,000
Level of benefit (%)
Entertainment
20,000
Level of importance of customer (%)
Miscellaneous expenses
45,000
None
Exhibit 3. Main activities and their second stage cost drivers
Activity
Cost driver
Customer contact
Number of customer contacts
Quote preparation
Number of quotes
Engineering work
Engineering hour
Material purchasing
Number of purchase orders
Production preparation
Number of production runs
Material receiving and handling
Number of receptions
Production management and supervision
Product complexity
Quality assurance
Product complexity
Product shipping
Distance
Customer payment administration
Number of payments
General management and administration
Intensity of activities
Exhibit 4. Expense categories (hierarchical tree)
Overhead Allocation
Overhead
Expense categories
$ 1,000,000
Administration
Rent & Utilities
Transport
Product Shipment
Business Insurance
Entertainment
$ 270,000
$ 150,000
$ 50,000
$ 45,000
$ 40,000
$ 20,000
Depreciation
Office Expenses
Interest
Business Travel
Advertising
Miscellaneous
$ 180,000
$ 70,000
$ 45,000
$ 45,000
$ 40,000
$ 45,000
Activities
Customer contact
Engineering work
Production preparation
Production management
Product shipment
General management
Quote preparation
Material purchasing
Material receiving
Quality assurance
Customer payment
Products
Product 1
Product 2
Product 3

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Exhibit 5. Expense-Activity-Dependence (EAD) matrix
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Customer contact
ä
ä
ä
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ä
ä
ä
Quote preparation
ä
ä
ä
ä
Engineering work
ä
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ä
ä
ä
ä
Material purchasing
ä
ä
ä
ä
ä
Production preparation
ä
ä
ä
ä
Material receiving and handling
ä
ä
ä
ä
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Production management
ä
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ä
ä
Quality assurance
ä
ä
ä
ä
ä
Product shipment
ä
ä
ä
ä
ä
ä
ä
Customer payment
ä
ä
ä
ä
ä
General management
ä
ä
ä
ä
ä
ä
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ä
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Exhibit 6. Expense-Activity-Dependence (EAD) matrix
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Expe
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Dep
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Of
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Bu
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Customer contact
0.06
0.01
0.24
0.63
0.64
0.58
0.09
Quote preparation
0.10
0.05
0.14
0.09
Engineering work
0.10
0.70
0.12
0.08
0.14
0.09
Material purchasing
0.08
0.09
0.09
0.80
0.09
Production preparation
0.04
0.11
0.03
0.09
Material receiving and handling
0.05
0.09
0.06
0.40
0.11
0.09
Production management
0.20
0.13
0.01
0.09
Quality assurance
0.10
0.30
0.20
0.02
0.09
Product shipment
0.05
0.12
0.05
0.60
1.00
0.23
0.09
Customer payment
0.04
0.01
0.08
0.46
0.09
General management
0.18
0.07
0.20
0.20
0.23
0.20
0.36
0.42
0.09
To systematically describe the contribution of
will sum to one, implying that the entire expense category
activities to expense categories, the Expense Activity
is spread across the activities. The ratios presented in
Dependence (EAD) matrix was used. The EAD matrix
Exhibit 6 were obtained by using the three procedures
for Tool & Die Inc. is shown in Exhibit 5. A “ä” at the
described previously: actual data, systematic appraisal
entry i,j denotes that the activity i generates expense in
(AHP), and educated guesses. When data was available
category j.
the ratios were determined according to the first stage cost
In step four, the costs of each expense category
driver. For instance, Tool & Die Inc. tracked the miles
are traced to activities. Each expense category is divided
consumed by the activities material receiving and
among activities according to the proportion of
handling and product shipment (miles is the first stage
contribution. For instance, the expense category
cost driver for “Transport”). The records showed that
“Transport” is divided into two activities (material
40,000 miles and 60,000 miles were consumed by
receiving and product shipment), and the ratio of
material receiving and handling and product shipment,
contribution is 0.4 and 0.6, respectively. In this case, 0.4
respectively. Accordingly, the ratios for the expense
and 0.6 as shown in Exhibit 6 replaces the corresponding
category “Transport” were 0.4 and 0.6.
check marks of the EAD matrix. Note that each column

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On the other hand, Tool & Die Inc. did not keep
shown in Exhibit 9. In a similar fashion, a “ä” at the
track of the distance for business travel (distance is the
entry i,j denotes that product i consumes activity j.
first stage cost driver for the category expense “Business
In step seven, the check marks were replaced by
travel”). The activities that cause business travel expenses
the corresponding ratios.
were customer contact, engineering work and general
As before, the ratios were calculated using educated guess,
management. In this situation the ratios were estimated
systematic appraisal (AHP), and actual data. For
using AHP. Employees at Tool & Die Inc. involved in
example, the three products consume the activity material
these three activities were asked to estimate the relative
purchasing. To estimate the appropriate ratios, the
distance (cost driver) used by each activity. For example,
employees involved in production were asked the relative
the following three questions were asked:
number of purchase orders (cost driver for material
• How was the total distance traveled due to customer
purchasing) required for each product. The following
contact compared with engineering work?
questions were asked to obtain information needed for
• How was the total distance traveled due to customer
AHP:
contact compared with general management?
• How was the total number of material purchase orders
• How was the total distance traveled due to
for product 1 compared with product 2?
engineering work compared with general
• How was the total number of material purchase orders
management?
for product 1 compared with product 3?
• How was the total number of material purchase orders
The answers to these questions were translated into
for product 2 compared with product 3?
numbers using the scale measurement table shown in
Exhibit 7, and then they were input into the software
The ratios were then placed into the APD matrix,
package Expert Choice (Expert Choice is a decision
as shown in Exhibit 10. In step 8, the overhead costs for
support software developed and distributed by Expert
each product was computed. The resulting APD matrix,
Choice, Inc.) to estimate the ratios.
shown in Exhibit 11, gives the total overhead costs for
each product as well as their origin.
Exhibit 7. Scale measurement table
Conclusion
Numerical values
Definition
The implementation of a new cost system involves
1
Equally important
investment in time and money. A cost system based on
3
Slightly more important
ABC requires organizational changes, employee
5
Strongly more important
acceptance, investment in software and hardware,
7
Very strongly more important
equipment for data collection, and so on. Although, ABC
9
Extremely more important
has been successfully used in many large companies it
2,4,6,8
Intermediate values
does not guarantee a payback in a short period of time. By
using the proposed method for implementing an ABC
In step five, every entry i,j of the EAD matrix
costing system, the risk of switching from a traditional
was replaced with the resulting dollar value by
costing system to an extensive ABC system can be reduced
multiplying the cost of the expense category j and the ratio
significantly. The proposed method is more suitable for
i,j. The new matrix gives the dollar resource consumption
smaller companies because it provides a smooth transition
of each activity. The total cost for each activity was
from a traditional costing system to ABC, it does not
obtained by adding each row. Exhibit 8 depicts the new
require a high investment in sophisticated data collection
EAD matrix for Tool & Die Inc. with the resulting dollar
systems, and it does not require a serious organizational
resource consumption of each activity.
restructuring. Therefore, the proposed method can be used
In step six, activity costs were traced to each
as an intermediate step for gradually implementing a full
product after the total cost of each activity was
ABC system where the estimated data is replaced by
determined. The procedure is similar to the one used for
actual data. In addition, the EAD and APD matrices assist
tracing cost in the first stage; however, second stage cost
in the comprehension of how overhead costs are
drivers allowed Tool & Die Inc. to determine or estimate
generated. These matrices can also be used for
activity consumption by product. In this stage the APD
recognizing improvement opportunities. As a future step a
matrix is used. The APD matrix for Tool & Die Inc. is
software package based on this methodology can be
developed that would trace overhead cost to products
accurately, at low cost, and in short time.

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3.
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31
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53
33
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19

---

Exhibit 11. Activity-Product-Dependence (APD) matrix ($ 10,000)
Activity Cost
9.19
$
$ 5
.02
18.88
$
8
$ .33
$ 3.53

$ 6.1

5
8.
$ 01
11
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12.51
$
4.22
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1
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g
l
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Total Cost
Product 1
$ -

$
-

3
$ .78
$ 1
.17
$ 0.74

$ 0.7

4
2.
$ 72
11.83
$
4.00
$
$ 0.89

4.
$ 06
$
29.9

2
Product 2
4.87
$
3
$ .01
1.
$ 89
$ 2
.83
$ 0.95

$ 2.5

2
2.
$ 16
$ -
$ 3.25

$ 1.60

4.
$ 06
$
27.1

5
Product 3
4.32
$
$ 2
.01
13.21
$
4
$ .33
$ 1.83

$ 2.8

9
3.
$ 12
$ -
$ 5.25

$ 1.73

4.
$ 19
$
42.8

8
References
Johnson, H. T., “The Decline of Cost Management: A
Bharara, A. and Lee, C.Y., “Implementation of an
Reinterpretation of 20th-Century Cost Accounting
Activity-Based Costing System in a Small Manufacturing
History,”
Journal of Cost Management, Vol. 1, No.1,
Company,” International Journal of Production Research,
(Spring 1987), pp.5-12.
Vol.34, No.4, 1996, pp. 1109-1130.
Johnson, H. T., “Activity Management: Reviewing the
Cooper, R., “The Two-Stage Procedure in Cost
Past and Future of Cost Management,” Journal of Cost
Accounting- Part One,” Journal of Cost Management,
Management, Vol.3, No.4 (Winter 1990), pp. 4-7.
Vol.1, No.2, (Summer 1987a), pp. 43-51.
Johnson, H. T., “Activity-Based Management: Past,
Cooper, R., “The Two-Stage Procedure in Cost
Present, and Future,” The Engineering Economist, Vol.36,
Accounting- Part Two,” Journal of Cost Management,
No.2, (Spring 1991), pp.219-238.
Vol.1, No.3, (Fall 1987b), pp. 39-45.
Needy, K. L. and Bidanda, B., “ Activity Based Costing
Cooper, R., “The Rise of Activity-Based Costing- Part
for Small Manufactures- A Field Study,” 4th Industrial
One: What is an Activity-Based Cost System?” Journal of
Engineering Research Conference Proceedings,
Cost Management, Vol.2, No.2 (Summer 1988a), pp.45-
Nashville, TN, May 24-25, 1995, pp. 628-634.
54.
Saaty, T. L., Decision Making for Leaders, London:
Cooper, R., “The Rise of Activity-Based Costing- Part
Lifetime Learning Publications, 1982.
Two: When Do I Need an Activity-Based Cost System?”
Journal of Cost Management, Vol.2, No.3, (Fall 1988b),
Turney , P. B., “Using Activity-Based Costing to Achieve
pp.41-48.
Manufacturing Excellence,” Journal of Cost Management,
Vol.3, No.2, (Summer 1989), pp. 23-31.
Cooper, R., “Elements of Activity-Based Costing”,
Emerging Practices in Cost Management. Boston:
Welsh, J. A. and White, J. F., “A Small Business Is not a
Warran Gorham & Lamont, 1990.
Little Big Business,” Harvard Business Review, July-
August 1981, pp 18-32.
Cooper, R., and Kaplan, R. S., “Measure Cost Right:
Make the Right Decisions,” Harvard Business Review,
About the Authors
September-October 1988, pp. 96-102.
Narcyz Roztocki is an Assistant Professor of Business
Administration at the State University of New York
Golden, B. L., Wasil, E. A., and Harker, P. T., The
(SUNY) at New Paltz. He received his M.S. degree in
Analytic Hierarchy Process, Applications and Studies,
Mechanical Engineering from the Technical University
New York: Springer-Verlag, 1989.
Hamburg-Harburg, Germany and his Ph.D. in Industrial
Engineering from the University of Pittsburgh. His
Johnson, H. T. and Kaplan, R. S., Relevance lost: The rise
research focus is in the area of Strategic Management,
and fall of management accounting, Boston: Harvard
Activity Based Costing, Economic Value Added, Decision
Business School Press, 1987.
Support Tools and Information Systems. He is a member
of ASEM and IIE.

---

Jorge F. Valenzuela received his B.S. in Electronic
Engineering from Northern Catholic University in Chile
(1984). He obtained a M.S. degree in Statistics at CIENES
and a M.S. degree in Industrial Engineering at Northern
Illinois University in 1985 and 1996, respectively.
Currently he is a Ph.D. student at the University of
Pittsburgh.
Jose D. Porter received his B.S. in Mechanical
Engineering from Universidad Autonoma de Nuevo Leon
in Mexico in 1991. He obtained a M.S. degree in
Manufacturing Systems at I.T.E.S.M. (Mexico) in 1994.
Currently he is a Ph.D. candidate at the University of
Pittsburgh.
Robin M. Monk received her B.S. in Industrial
Engineering from the University of Pittsburgh in 1996.
She obtained a M.S. degree in Industrial Engineering at
the University of Pittsburgh in 1998. Currently she is
working for PPG Industries in Pittsburgh, PA.
Kim LaScola Needy is an Assistant Professor of
Industrial Engineering at the University of Pittsburgh.
She received her BS and MS degrees in Industrial
Engineering from the University of Pittsburgh, and her
Ph.D. in Industrial Engineering from Wichita State
University. She has obtained nine years of industrial
experience at PPG Industries and The Boeing Company.
Her research interests include Activity Based Costing,
TQM, Engineering Management, and Integrated Resource
Management. Dr. Needy is a member of ASEE, ASEM,
APICS, IEEE, IIE, SME and SWE. She is a licensed PE
in Kansas.

---