Activity-based Costing Approach Research Articles

Proposed Implementation Of Activity-Based Costing To Determine Cost Allocation In Manufacturing Company PT. S

This research discusses the proposal for implementing Activity-Based Costing (ABC) in the cardboard box manufacturing company, PT. S, focusing on Plant 4 located in West Java. The products produced include standard A1 cardboard boxes, A1 printing, plain die-cut boxes, printed die-cut boxes, and top-bottom boxes. The application of the ABC approach is carried out with the intention of presenting more detailed cost information through the identification and allocation of costs to the various activities involved in the production process. The traditional method appears to be inappropriate as overhead allocation only burdens direct raw material costs, direct labor costs, shipping costs, and sales commission to products using percentages from historical data as a reference for the selling price of the product. The research type is problem-solving with a descriptive qualitative research method. The results indicate that the ABC method provides more accurate calculations by allocating costs per activity that are then assigned to products. Among the five studied products, it is found that the plain A1 product is the least profitable. On average, the allocation of product costs experiences undercosting, except for plain die-cut products that experience overcosting. PT. S needs to consider the use of the ABC method in product cost and product selling prices to be able to reduce costs and increase the profitability

Equilibrium between Environmental and Economic Objectives: An Activity-Based Costing Approach Application for Carbon Emissions Management in the Aluminum Alloy Wheel Industry

In the face of the increasingly dire threat of global climate change, reducing carbon emissions has become an urgent priority for governments and corporations worldwide. The aluminum alloy wheel manufacturing industry bears an even heavier burden for emission mitigation due to its high production volume, complex processes, and proportionally higher carbon footprint. With impending carbon taxes and trading policies looming, the industry urgently needs to strike a balance between maximizing profits and minimizing carbon emissions. Leveraging real-world industry data, this research develops four green Activity-Based Costing (ABC) models and utilizes optimization software to compare the following scenarios: non-continuous carbon tax, carbon tax with trading, tiered tax with exemptions, and exemptions combined with trading. Results demonstrate that integrating carbon trading and targeted tax reductions can improve corporate financial positions without severely compromising environmental goals. Although identifying optimal balance points remains a highly complex process, this study equips enterprises and policymakers with quantitative tools to navigate fluctuating carbon regulatory environments. As national policies progress, more multifaceted dynamic carbon tax models will likely provide more profound insights for sustainable development.

Cost of implementing CAR-T activity and managing CAR-T patients: an exploratory study.

Chimeric antigen receptor T cells (CAR-T) represent an innovation but raise issues for healthcare payers because of the uncertainty on impact at market launch, high cost and important organisational impact. The literature has focused on their assessment, appraisal and market access solutions. No evidence on the costs sustained to implement CAR-T is available and a few studies reported the cost of the CAR-T clinical pathway, including the activities that are remunerated through inpatient or outpatient fee-for-service/episode. This paper aims at filling the information gap, assessing the cost of implementing CAR-T activity and the full cost of managing the CAR-T clinical pathway. Cost analysis relied on the Activity Based Costing approach, which was applied to two Italian healthcare organisations, both CAR-T Centres authorized by the regional governments with a minimum of 20 patients treated with the first two CAR-T therapies launched on the market. The cost of implementing CAR-T was estimated at €1.31million (calculated for one of the organizations with complete data). Most of these costs (77%) were generated by quality assurance activity. The mean cost per patient entering the CAR-T pathway (59 and 27) and surviving at follow-up (21 and 5) ranges from €48K to €57K and from €96K to €106K, respectively. Fees for hospitalization and infusion of gene therapy accounts for more than 70% of these costs. The actual hospitalisation cost varies greatly across patients and is in general lower than the fee-for-episode paid by the region to the hospital. Despite its limitations (exploratory nature; the time spent by staff on activities which are not remunerated through fees was estimated through interviews with the CAR-T coordinators; cost items are not fully comparable), this research highlighted the relevant organisational and economic impact of CAR-T and provided important insights for policy makers and healthcare managers: the necessity to invest resources in CAR-T implementation; the need for assessing activities which are not remunerated through fees for service / episode; the opportunity to shift from fee-for-episode/service to bundled payments for CAR-T clinical pathway.

EE54 Costs of Proton Radiotherapy and Photon Radiotherapy for Non-Small Cell Lung Cancer in the Netherlands Using a Time-Driven Activity-Based Costing Approach

EE54 Costs of Proton Radiotherapy and Photon Radiotherapy for Non-Small Cell Lung Cancer in the Netherlands Using a Time-Driven Activity-Based Costing Approach

Comparison Analysis of Rates by Unit Cost and INA-CBGs Rates in Hemodialysis Services at Hospital X

Comparison Analysis of Rates by Unit Cost and INA-CBGs Rates in Hemodialysis Services at Hospital X

Implementasi Activity Base Costing Dalam Pengendalian Biaya Pada CV. Berlian Kilau Abadi-Breakshoot Billiar

This study aims to describe the determination of the cost of production that has existed so far in the company CV Berlian Kilau Abadi-Breakshoot Billiard. Furthermore, calculating the production costs using the Activity-Based Costing approach. This study uses a qualitative approach with the case method. This study obtained data from the company in the form of secondary data, and primary data in the form of direct interviews with research informants. Research data through the data credibility testing process. Data were analyzed using the approach of Miles and Huberman (1994), which was carried out simultaneously with the process of data collection, data presentation, data reduction, and drawing conclusions or verification. The research results show that the company has never done a detailed calculation of production costs, only they are exploring the amount of costs that are likely to be incurred before determining the selling price. The selling price set for the billiard table rental game / sports service is primarily based on the price prevailing in the Bengkulu City market. The company has not detailed the types of costs incurred and how much they cost in determining the existing rental rates. The bookkeeping and financial management system still uses the traditional system by recording all the receipts and expenses that have occurred, and at the end of the month the total will be calculated to see if it gets a profit or a loss. The calculation of production costs using the Activity-Based Costing (ABC) approach is carried out in order to obtain the total production costs for each available hour. There are 19 cost items and their triggers which are identified as components of production costs. Costs are separated into direct and indirect production costs, then calculated the amount of the cost of production per hour of billiard table rental services. The total production costs generated are still below the selling price, namely IDR 17,638.09 (direct production costs IDR 15,691.88, and indirect costs IDR 1,946.21). Judging by the selling price of IDR 25,000, it can be concluded that the company is still in the profit category.

Evaluation of operation cost and energy consumption of ports: comparative study on different container terminal layouts

Automatic container terminals (ACTs) have emerged as the development direction of upgrading and transformation for traditional manual container terminals. A number of terminal layouts are devised and implemented. However, it is the lack of a comprehensive comparison of different container terminal layouts from aspects of operation cost and energy consumption. In view of this, a Time-Driven Activity-Based Costing approach is used to identify the ACT profitability bottlenecks. A multi-agent based simulation model considering four main terminal layouts is established. The multi-level handling of ACTs is simulated and the corresponding operation time and energy consumption are calculated. Simulation results show that automated guided vehicles (AGVs) are the key to improving the cost-effectiveness of ACTs. The cost-effectiveness of ACTs with non-cantilever automated rail-mounted gantries (ARMGs) is more vulnerable than that of ACTs with bilateral cantilever ARMGs. On average, ACTs with bilateral-cantilever ARMGs consume less energy per container task than ACTs with non-cantilever ARMGs. This study provides management insights into resource allocation, layout design, and sustainable development.

Cost-benefit analysis of Intensive Care Unit with Activity-Based Costing approach in the era COVID-19 pandemic: A case study from Iran.

Providing intensive care to acute patients is a vital part of health systems. However, the high cost of Intensive Care Units (ICU) has limited their development, especially in low-income countries. Due to the increasing need for intensive care and limited resources, ICU cost management is important. This study aimed to analyze the cost-benefit of ICU during COVID-19 in Tehran, Iran. This cross-sectional study is an economic evaluation of health interventions. The study was conducted in the COVID-19 dedicated ICU, from the provider's point of view and within one-year horizon. Costs were calculated using a top-down approach and the Activity-Based Costing technique. Benefits were extracted from the hospital's HIS system. Benefit Cost ratio (BCR) and Net Present Value (NPV) indexes were used for cost-benefit analysis (CBA). A sensitivity analysis was performed to evaluate the dependence of the CBA results on the uncertainties in the cost data. Analysis was performed with Excel and STATA software. The studied ICU had 43 personnel, 14 active beds, a 77% bed occupancy rate, and 3959 occupied bed days. The total costs were $2,372,125.46 USD, of which 70.3% were direct costs. The highest direct cost was related to human resources. The total net income was $1,213,314.13 USD. NPV and BCR were obtained as $-1,158,811.32 USD and 0.511 respectively. Despite operating with a relatively high capacity, ICU has had high losses during the COVID-19. Proper management and re-planning in the structure of human resources is recommended due to its importance in the hospital economy, provision of resources based on needs assessment, improvement of drugs management, reduction of insurance deductions in order to reduce costs and improve ICU productivity.

CANBUS-enabled activity-based costing for leveraging farm management

The improvement of economic management in farms has become an important research topic in recent decades as the most dominant feature of current farm management information systems (FMIS). Production cost statistics allow farmers to assess the economic impact of farm activities and compare historical data against previous farm practices or competitors’ activities. Therefore, the availability of reliable cost data is of utmost importance for FMIS, especially data on agricultural machinery usage. Technical sheets, grey literature, and international standards provide estimates of farm operation costs, but they suffer from low accuracy because agricultural machinery is subjected to the high variability of both environmental and working conditions. Based on these considerations, this work aims to develop a novel methodology for cost calculations of field operations harnessing real-world CANBUS data based on the activity-based costing (ABC) approach. The research was conducted on a 198-kW tractor equipped with a CANBUS logger and several implements on which Bluetooth beacons were installed to automatically recognise agricultural operations. The acquired data were processed to identify the daily jobs performed by observing machine position (e.g., field, farm, or road) and operating condition states (e.g., moving, fieldwork, or idling). The ABC approach was applied in two steps: first, cost driver rates were assessed to define capital and non-capital costs; then, the costs of each agricultural operation performed were defined, correlating the cost drivers with the recorded jobs. The results show that fuel and labour costs combined affect 63%–71% of the total cost per hectare for the tested implements. The cost per hectare was found to be highly variable: the biggest gap between the higher and lower values registered with the same implement was 216.48 € ha−1. This methodology could help farmers to make more thoughtful decisions about crop, land, and farm operations management.

A novel cost-management system for container terminals using a time-driven Activity-Based Costing approach

Cost-management systems play a significant role in the operations management of container terminal companies; however, in complex loading and discharging operations, traditional Activity-Based Costing (ABC) systems are costly and difficult to be built and maintained. A modified Time-Driven ABC method, considering all the procedures required to obtain the final product and estimating resource usage accordingly, has emerged in response to this challenge. This study provides terminal operators with an effective cost analysis tool using a time-driven ABC method to identify bottleneck in handling process and calculate the handling cost of cost objects. Also, this research uses a container vessel and ten shipping lines calling at Shanghai East Container Terminal as case studies, and presents a full cost analysis of the activities and their respective costs. This investigation provides insights into the causes of excessive logistics costs and highlights the benefits of applying Time-Driven ABC method in the container terminal industry, along with shortcomings and potential future research.

Use of activity-based costing approach for cost management in a railway transport enterprise

This research outlines a research study wherein an implementation of the activity-based costing (ABC) approach for cost management in a railway transport enterprise is addressed. ABC is an efficient technique for enhancing the quality of provided services and process complexity of certain railway companies, executing its activities at a regional or international scale. It is one of the new costing approaches that eliminate the inaccuracies and deficiencies of the traditional costing system. Compared to other costing techniques, considerable change lies especially in the way of assigning indirect cost units to activities based on actual causations, and subsequently, assigning activities to the very cost items by the intensity of their consumption. Furthermore, this approach allows decision-makers to identify specific cost item in terms of determining ways of how they can be managed. The main objective of this work is to elaborate a particular study with a draft application of the ABC method encompassing a description of procedure steps, along with relevant quantifications, as well as summarising the results obtained.

Activity-Based Life-Cycle Costing applied to an innovative forestry company product portfolio

An accounting system helps to provide information for planning and control of production. This article presents a Life Cycle Costing by using an Activity Based Costing approach of an innovative forestry company. In order to perform a cradle-to-gate assessment the study covers the forest and industrial activities of the forest product processing. The costs of each product in the portfolio are determined by the treatment activities they undergo. The inventory covers several years of activity of the company, which makes it possible to calculate the uncertainty of the average results with Monte Carlo simulation presented in the result section. Based on the results a products portfolio analysis was performed to identify the development progress phases of the mains products to support the product rollover strategy decision.

Customer Profitability Analysis Through Activity-Based Costing Approach In The Algerian Telecom Sector:, A Field Study

Customer Profitability Analysis Through Activity-Based Costing Approach In The Algerian Telecom Sector:, A Field Study

Does Graft type affect the Cost of Anterior Cruciate Ligament Reconstruction: A Time-Driven Activity-Based Costing Approach Comparing Hamstring and Bone Patella Bone Autograft

Objectives:Annually, an estimated 250,000 anterior cruciate ligament (ACL) reconstructions are performed. Operative management of ACL injuries has increased 22% between 2002 and 2014. With national healthcare expenditures rising at unsustainable rates, an improved understanding of healthcare costs is essential to identifying avenues of inefficiency and implement innovative solutions. This study is purposed to utilize time-driven activity-based costing (TDABC) to estimate the costs for the two-year care episode in the surgical reconstruction of ACL tears. Provided its high incidence, the operative reconstruction of ACL injuries serves as a prime setting for this study.Methods:This study follows 611 patients that underwent an ACL reconstruction for an acute ACL tear between 2009-2016 within a single outpatient orthopaedic surgery center (Figure 1). Patient demographics were collected via the electronic medical record (EMR) (Table 1). The total cost-of-care was determined using time-driven activity-based-costing (TDABC). This formula derives the cost of care as a function of the time spent for each activity and personnel cost contributions for all involved. This process was performed at all phases: surgical intervention, all clinical follow-ups, and physical therapy (PT) sessions.Results:A total of 611 patients were included for this investigation. The patient sample was primarily female (n=355, 58.1%) with an average age of 28.9 + 12.9 [27.9, 30.0], and average BMI of 25.5 + 4.5 [25.2, 25.9]. The majority of the patients identified with an Anesthesiologist Society of America (ASA) score of 1 (n=505, 83.9%). The average operative time was 107.1 + 31.5 minutes [104.6, 109.6]. The average TDABC cost-of-care was derived at $3364.95 + $958.99 [$3288.75, $3441.14]. Surgical costs occupied the greatest proportion of the overall cost-of-care, $1836.11 (53.2%), followed by costs relating to surgical implants, $911.61 (27.1%), physical therapy appointments, $342.00 (10.2%), and clinical follow-up appointments, $318.77 (9.5%) (Figure 1). A total of 459 (75.1%) patients were treated with an autograft, averaging a total cost-of-care of $2882.19, with the 90th percentile costing $3427.23 and 10th percentile costing $2343.08, reporting a 16.0% variability in costing. Of the 152 (24.9%) allografts, the average cost of care was $4884.10, with the 90th percentile costing $5321.50 and 10th percentile costing $4411.25, reporting a 9.0% variability. Hamstring autografts reported a significantly higher cost-of-care when compared to bone-patellar-bone (BTB) autografts (Hamstring: $3120.10 vs BTB: $2718.60; p<0.01).Conclusion:Given the increasing frequency of ACL procedures performed, an improved understanding of its costing components is critical for implementing change and strategizing solutions for increasing healthcare costs. Operative costs drive the total cost of care with implants, graft choice, and surgical resources constituting almost 80% for the two-year cost episode. With the growing focus of healthcare transitioning towards value-based healthcare delivery and cost reduction, identifying areas of costing inefficiency in surgical decision-making and implant-choice provides an avenue to reduce costs.Figure 1.Table 1.Population characteristics for study sample between 2009-2016 (N=611) n (% of N) or Mean SD (95% CI) GenderFemale: 355 (58.1%)Male: 256 (41.9%)Age28.912.9 (27.9, 30.0)BMI25.54.5 (25.2, 25.9)Anxiety105 (17.3%)Depression82 (13.5%)ASA1: 505 (83.9%)2: 92 (15.3%)3: 5 (0.8%)Operative Time (Minutes)107.131.5 (104.6, 109.6)Other Ligament TearLateral Collateral Ligament (LCL): 6 (1.0%)Medial Collateral Ligament (MCL): 30 (4.9%)Posterior Collateral Ligament (PCL): 3 (0.5%)Meniscus TearLateral: 213 (38.9%)Medial: 170 (31.1%)Meniscetomy188 (40.6%)Graft SourceAllograft: 151 (24.7%)Autograft: 460 (75.3%)Graft TypeBone-Patellar Tendon-Bone Graft (BTB): 400 (65.4%)Hamstring: 197 (32.2%)Posterior Tibialis: 9 (1.5%)Anterior Tibialis: 5 (0.8%)SANE @ BaselineSANE @ 1-YearSANE @ 2-Years63.423.3 (61.5, 65.4)88.412.7 (87.0, 89.9)85.622.4 (83.8, 87.5)SANE 1-Year24.122.8 (21.5, 26.7)SANE 2-Years22.929.3 (20.4, 25.4)KOOS @ BaselineKOOS @ 1-YearKOOS @ 2-Years65.315.9 (63.6, 66.9)79.712.7 (77.5, 81.9)83.213.5 (81.8, 84.6)KOOS 1-Year17.416.1 (14.6, 20.1)KOOS 2-Years17.916.8 (16.2, 19.7)Total Cost$3364.95958.99 ($3288.75, $3441.14)1-Year Value Coefficient ()0.550.53 (0.46, 0.64)2-Year Value Coefficient ()0.580.57 (0.52, 0.64)A Summary of the study populations’ characteristics

A Simplified Activity-Based Costing Approach for SMEs: The Case Study of an Italian Small Road Company

Purpose: The paper proposes an original conceptual model for designing a simplified Activity-Based Costing (ABC) approach for Small and Medium-sized Enterprises (SMEs) by focusing on the transport sector. Design/Methodology/Approach: The model is designed starting from the distinctive characteristics of the SMEs’ collaborative culture. The approach is then tested in the case of an Italian small-road company. Findings: The simplified ABC, which was gradually introduced in the SME, allowed the firm to gain confidence with the costing system. Moreover, the discussion of the results led to identifying the main areas to improve. Practical Implications: Costing systems based on collaboration can lead to operational improvements in SMEs operating in dynamic and competitive sectors as transport. Moreover, advanced technologies may hold a crucial role for their development. Originality/Value: Not much research has considered collaboration as a driver for introducing ABC in SMEs. The paper contributes to the literature on simplified managerial approaches, suggesting trends for future research.

Genetic algorithm for determining the construction logistics of precast components

Purpose Precast construction has become increasingly popular in the construction industry. Nonetheless, the logistics of construction materials has been a neglected topic, and this neglect has resulted in delays and cost overruns. Careful planning that considers all of the factors affecting construction logistics can ensure project success. The purpose of this paper is to examine the potential for using genetic algorithms (GAs) to derive logistics plans for materials production, supply and consumption. Design/methodology/approach The proposed GA model is based on the logistics of precast components from the supplier’s production yard, to the intermediate warehouse and then to the construction site. Using an activity-based costing (ABC) approach, the model not only considers the project schedule, but also takes into account the production and delivery schedule and storage of materials. Findings The results show that GAs are suitable for solving time-cost trade-off problems. The optimization process helps to identify the activity start time during construction and the delivery frequency that will result in the minimal cost. What-if scenarios can be introduced to examine the effects of changes in construction logistics on project outcomes. Originality/value This paper presents a method for using GAs and an ABC approach to support construction logistics planning decisions. It will help construction planners and materials suppliers to establish material consumption and delivery schedules, rather than relying on subjective judgment.

The analysis of healthcare costs applying an Activity-based Costing approach

We introduce an application of Activity-based Costing (ABC) to specific healthcare procedures. The analyses carried out, using data of the Perugia’s hospital. The main purpose of our study is to analyze the cost incurred between two procedures that have the same DRG (diagnosis-related group), in order to highlight how the costs are different in relation to the different cost procedure., highlight cost between the two procedures. Moreover, we identify also differences in the level of resource absorption in both procedures and, therefore, different cost impacts on the procedures are analyzed. In this respect, the application of the ABC has the undoubted advantage of determining the cost of healthcare service and support more objective decisions to be taken by healthcare management.

Production decision model with carbon tax for the knitted footwear industry under activity-based costing

To respond to the increasingly serious problems of a lack of workers, the need to control costs, and environmental issues such as carbon emissions, the footwear industry must change its production model to produce highly competitive products. This research aimed to solve the problem of the lack of workers and ameliorate environmental issues by using the activity-based costing (ABC) approach and the theory of constraint to effectively track related costs with the green production decision model (GPDM). This study used knitted footwear production as a case for effectively integrating the advantages of shoemaking and textiles with the ABC approach. These changes could help footwear companies to effectively control costs and increase productivity. From the literature and the sensitivity analysis of carbon tax rates, it could be reasoned that companies will have the motive to implement the low-carbon technologies with higher cost at the higher level of carbon tax rates.

Activity Based Costing for Wastewater Treatment and Reuse under Uncertainty: A Fuzzy Approach

The objective of this article is to present a methodology for computing and allocating wastewater recuperation costs using an Activity-Based Costing (ABC) methodology. One of the most critical problems in modelling those costs is the limited information and the subjectivity used to represent some of the cost’s elements (e.g., values, drivers, among others). Thus, a fuzzy ABC approach is incorporated into the methodology to overcome those limitations. The application of this methodology aims at providing an alternative procedure to allocating the costs related to wastewater management activities to products. To validate the proposed methodology and illustrate its utility, a case study using data from a bus assembly plant is provided. Part of the wastewater produced is coming from a surface treatment installation which, after a recovery process, reuse part of the same water in a closed loop circuit. Using the proposed Fuzzy ABC methodology, the costs (including uncertainty) of the surface treatment and water treatment activities can be appropriately allocated to the products that generate those activities and that waste.

Cost Savings Analysis for a Diabetic Retinopathy Teleretinal Screening Program Using an Activity-Based Costing Approach

To examine the costs and cost savings associated with a large, urban teleretinal screening program for diabetic retinopathy (DR). Retrospective analysis. Eighteen thousand twenty-five patients (36 050 eyes) screened via the Harris Health System (HHS) DR teleretinal screening program between June 2013 and April2014. Activity-based costing applied to the operational screening pathway was implemented to determine the cost of screening. Actual costs were calculated based on retrospective chart review and figures obtained from the HHS and Centers for Medicare and Medicaid Services. Theoretical costs of in-clinic examinations and delayed intervention were compared with actual costs of screening and treatment to determine costs savings. Costs and cost savings in United States dollars were estimated. The per-patient cost of teleretinal screening itself was found to be $27.35, whereas the average total cost (factoring in treatment) per patient was determined to be $43.14. The physical examination-only and treatment-only models yielded cost savings estimates of $2 047 442.53 and $1 148 597.35, respectively. The cost savings yielded by the HHS DR teleretinal screening program compared with conventional screening are substantial and corroborate the findings of similar studies that have analyzed teleretinal screening. Additionally, it can be presumed that there are additional indirect economic benefits resulting from earlier detection and treatment of disease.