Concept Of Activity-based Costing Research Articles

Industrial Data-Driven Processing Framework Combining Process Knowledge for Improved Decision-Making—Part 2: Framework Application Considering Activity-Based Costing Concepts

Operating time series data collected and stored in historian must be managed to extract their full potential. Part 1 of this paper proposed a structured way (a sophisticated approach) to process industrial data; this first part explains in detail the data processing framework used as the basis for the costing analysis present in the second part of this series. The framework considers the analysis scope definition, data management steps, and operating regimes detection and identification. The added value of this proposed framework is demonstrated in Part 2 via the use of cost accounting for operational problem-solving (debottlenecking), i.e., its practicality is validated via its application alongside a cost analysis on the brownstock washing department of a kraft pulp mill. The traditional debottlenecking approach assumes a single operating condition considering that operating regimes allow for a much more sophisticated debottlenecking study of the washing department. With the use of operations-driven cost modeling (contingent on activity-based costing concepts) and processed time series data corresponding to steady-state operation, incremental profit can be assigned to each operating regime in order to identify the most cost-efficient one. The overall objective of this two-part series is to convert processed industrial steady-state data and cost information into knowledge that can be used to optimize the washing department of a chemical pulp mill. More specifically, different operating regimes are assessed, and the most suitable operating strategy is defined. The application of activity-based costing on a large amount of historically processed industrial data led to the improvement in the operation. The identified optimal way to operate (pulp throughput, pulp conductivity, defoamer and bleaching chemical quantity, etc.) led to a profit of CAD 49 M per year. Lastly, a contribution analysis of the regimes based on PCA highlighted how the process was operated when the preferred performances happened.

Pengaplikasian Metode Activity Based Costing Pada Perhitungan Unit Cost di Pelayanan Kesehatan Gigi dan Mulut

Dental clinic is one type of privateowned service enterprise providing dental and oral health services. In the current global era, dental clinics must be able to compete with other dental health facilities. Dental clinics are required to manage effectively clinical management, especially in financial accounting. Unit cost calculation using Activity Based Costing (ABC) method is a modern calculation. It has been implemented in several health facilities. The basic concept of ABC is a product derived from activities that will consume costs. The purpose of this paper is to provide an overview of the application of unit cost calculations with ABC in dental clinics. So it can formulated four steps of unit cost calculation with ABC as follows: preparation of data collection, data collection, ABC calculation of the first stage, ABC calculation of the second stage. The results of the calculation of unit cost with ABC are clinical financial accounting data which are used as a consideration in making desicion of the clinical strategy.

Pengaplikasian Metode Activity Based Costing Pada Perhitungan Unit Cost di Pelayanan Kesehatan Gigi dan Mulut

Dental clinic is one type of privateowned service enterprise providing dental and oral health services. In the current global era, dental clinics must be able to compete with other dental health facilities. Dental clinics are required to manage effectively clinical management, especially in financial accounting. Unit cost calculation using Activity Based Costing (ABC) method is a modern calculation. It has been implemented in several health facilities. The basic concept of ABC is a product derived from activities that will consume costs. The purpose of this paper is to provide an overview of the application of unit cost calculations with ABC in dental clinics. So it can formulated four steps of unit cost calculation with ABC as follows: preparation of data collection, data collection, ABC calculation of the first stage, ABC calculation of the second stage. The results of the calculation of unit cost with ABC are clinical financial accounting data which are used as a consideration in making desicion of the clinical strategy.

Simulation study integrated with activity-based costing for an electronic device re-manufacturing system

This paper presents a simulation study of a re-manufacturing system for electronic devices, which applies an activity-based costing (ABC) method to evaluate different system configurations. Unlike the typical metrics such as resource utilization and throughput used for simulations of processes to guide system improvements, the utilization of the cost aspect has been explicitly considered in this paper, as it is directly related to practice. A real data set obtained from actual re-manufacturing operations has been used for our case study. We quantitatively show how utilizing the concept of ABC to capture the direct labor cost and material labor cost can help make better decisions in selecting re-manufacturing system configurations.

ACTIVITY-BASED COSTING IN HEALTH CARE ORGANIZATIONS

The concept of Activity-Based Costing (ABC) provides informational support to the performance of key management activities in different organizations. Focused on activities and processes within the organization, this concept, using appropriate cost drivers, provides more accurate information on activity costs and costs objects. The paper analyzes the specificities of applying the traditional and improved model of activity-based costing in health organizations.

Research on the Application of Activity-Based Costing Based on the Concept of the New Accounting Standards

We encountered many obstacles in the implementation process of Activity-based Costing. But the new accounting standards fully embody a new accounting concept, coinciding with the concept of Activity-based Costing, and it brings a new opportunity to implement Activity-based Costing. The paper discusses the content.

Managers’ knowledge and financial performance in Iranian firms

Increasingly competitive global product markets have rendered many traditional performance measurements and reward systems obsolete. The need for organizations to adapt to today's dynamic and complex business environment in order to remain competitive is clear. In addition, the investment community has increased the pressure on managers to deliver value, driving for more accurate and transparent performance measurement. As a result, many organizations have had to re-examine their traditional performance measures and the structure of the compensation schemes that were built around them in the past decade. This paper will discuss Activity-based costing (ABC), the Balanced Scorecard and Economic Value Added (EVA), three frameworks that are becoming increasingly popular with companies in a wide range of industries. In Iran many of the financial managers especially those who are involve in small business use traditional management methods and they are not familiar with EVA, BSC and ABC techniques. We believe that in companies whose financial managers are familiar with ABC, EVA and BSC concepts their financial performances are increased.

The Effects of the Use of Activity-Based Costing Software in the Learning Process: An Empirical Analysis

This study investigates the influence of the use of accounting software in teaching activity-based costing (ABC) on the learning process. It draws upon the Theory of Planned Behaviour and uses the end-user computer satisfaction (EUCS) framework to examine students' satisfaction with the ABC software. The study examines students' satisfaction with the software and the mediating role it plays between assignment clarity and the understanding of ABC and between assignment clarity and their intention to learn more about the software used. We use a Partial Least Squares (PLS) path model to examine the framework of the study and draw on survey data. Our findings suggest that students' satisfaction with the ABC software plays a pivotal role in the learning process. This satisfaction not only has a significant direct impact on both students' perceptions of their understanding of ABC and students' willingness to learn more about the ABC software used, but it also fully mediates the relationship between assignment clarity and students' willingness to learn more about the software. Further, students' satisfaction with the ABC software enhances the effect of assignment clarity on the understanding of ABC concepts. Anecdotal evidence suggests that the use of the software improved the depth of students' understanding of ABC at both conceptual and practical levels.

Collaborative composition of processes in holonic manufacturing systems

Although it provides a flexible architecture to deal with changes and uncertainties, holonic manufacturing systems (HMS) also pose challenges in design and implementation. A challenge is to design a problem solving environment to guide the holons in HMS such that the decisions made by the individual holons as a whole collaboratively compose the production processes for the tasks. The objective of this paper is to propose a problem solving environment for the composition of minimal cost processes in HMS. Given a specific product type and due date, the problem is to dynamically compose a complete process in HMS to process the product by the due date. To achieve the objective, we combine multi-agent systems technology with Petri nets in this paper. We first propose architecture and a two-layer contract net protocol to describe the negotiation between order holons, product holons and resource holons in HMS. To determine whether it is feasible for a set product holons and resource holons to compose a process for an order holon, we propose Petri net models to capture the workflows and activities in product holons and resource holons, respectively. To optimize the cost in the composed manufacturing process, the concept of activity-based costing is adopted to assign the cost of the activities to Petri nets. The advantages of our design methodology include specification of workflows and resource activities with PNML to minimize the cost. To realize the two-layer contract net protocol relies on a mechanism for a holon to discover the services provided by other holons. We proposed a scheme for publication and discovery of holon services based on FIPA compliant multi-agent system platform. Based on the service publication and discovery scheme, interactions between holons with the two-layer contract net protocol can be realized. We develop a HMS system to solve the process composition problem.

Blood, Esa's and Costs

Background: The demand for allogeneic blood (packed red blood cells) has been progressively increasing. The introduction of safety measures substantially increased its cost and limited the available supply. Because both supply and demand for blood has not yet reached a plateau, namely in Portugal, the introduction and adoption of treatments that reduce transfusion, such as Erythropoiesis Stimulating Agents (ESA'S) for patients with chemotherapy induced anemia (CIA) is a welcome strategy to manage the hospital blood supply. Recently an advisory panel to the US Food and Drug Administration has recommended that the agency further limit the use of ESA'S, and in Europe, the European Medicines Agency (EMEA) emitted a statement that “cancer patients with a reasonably long life expectancy” should receive blood transfusions rather than take drugs for anemia. With these warnings we are probably going to see an increase in demand for blood. Estimating blood costs is a complex undertaking, surpassing simple versus demand economics, and is not simple or straightforward; the underlying issue is whether hospitals are billing appropriately for blood products and how extensively its value is calculated. The National Health Care System is making a huge effort to control the rising costs associated with the delivery of health services, namely developing a new allocation method for hospitals. Activity-based costing (ABC) is an approach to the management of resources that allows the ‘real’ resource costs and time of a service activity to be estimated. Traditional costing systems often group many costs together as overheads. The Accounting System for Activities in the Hospitals (SCAH) is outlined to evaluate detailed cost elements, understanding cost behaviour, which can facilitate future policy decisions, because policy makers have the opportunity to more fully understand the implications of incremental changes. We applied the SCAH to the Blood Bank of IPOFG Lisbon, in order to evaluate a far more accurate appraisal of the actual cost of the blood. The cost of correcting CIA is an open issue as both ESAS'S and Transfusion may offer symptomatic benefit. In Portugal the price of ESA'S, Erythropoietin alfa decreased almost 50% from 2000–2008, not including the final price, negotiated in each hospital. On the other hand, the price of one unit of packed RBCs continues to rise, and with different values, depending on the methodology used.Purpose: Evaluation of the costs of both alternatives to increase 1g of haemoglobin, in a hemato-oncological hospital, belonging to National Health Service and not for profit.Methods: We analysed the official prices of ESA'S between 2000–2008 published by the Ministry of Health. We used an activity – based approach to more fully account for the cost of blood, than present estimates, derived from the concept of activity-based costing (ABC). We applied this method to the process Chart flows of activities associated with blood collection facility and the others associated to the transfusion service.Results: Prices of Epoeitin - a (1000 UI/5μg) and Darbepoeitin according to National Catalogue Prices200020012002200320042005200620072008Epoietin-a€11,17€7,20€6,73€6,52€6,52€6,12€6,12€6,12€6,12Darbepoeitin---€7,80€7,00€6,52€6,52€6,12€6,12Price of Packed RBC (2007), calculated using ABC methodology%Price (€)Personnel25,3290,26Material to blood collection6,4723,07Equipment1,033,67Common Costs5,0317,92Reagents3,6913,15Outsourcing1,836,52Structures1,013,60Laboratory analysis15,8556,50Transfusion Session39,77141,75Total100%356,44Increment of 1g haemoglobin1 unit of Packed RBC and transfusion session30.000 UI EPO-a (fixed dose every week)150 mg Darbepoeitin (fixed dose every week)€356.44 + €30*€183,6 × 2 = €367,2* Haemovigilance network€183,6 × 4 = €734,4The cost of 1 unit of packed RBC is equivalent a two fixed doses of EPO- a and Darbepoitin, respectively (30000 UI and 150 mg). Each hospital can negotiate catalogue adjusted prices for ESA's, so if we presume that these values can be reduced by half, the price of 1 unit of packed RBC is equivalent to 4 fixed doses of treatment with ESA's.Conclusions: Once the ability of ESA's to reduce transfusions requirements has been documented in the literature, the costs of ESA'S and Transfusion might be another factor in determining which approach should be used.

The adoption of total cost of ownership for sourcing decisions––a structural equations analysis

This study investigates the adoption of total cost of ownership (TCO) analysis to improve sourcing decisions. TCO can be seen as an application of activity based costing (ABC) that quantifies the costs that are involved in acquiring and using purchased goods or services. TCO supports purchasing decision-makers in focusing on total value received and not simply price, and it extends ABC concepts and tools to an inter-organizational context. Based on ABC-adoption literature and focus-group discussions with senior purchasing executives, a model is developed to explain relationships among eight constructs hypothesized to explain TCO adoption: competitive pressure in customer markets, strategic purchasing orientation, top management support, functional management commitment, value analysis experience, adequacy of TCO information, success of TCO initiatives, and use of TCO-based review and reward systems. We test this model using multi-sample structural equation modeling on survey data collected from purchasing managers and plant maintenance managers. We find support for most of our hypotheses and, further, that the posited relationships are largely invariant across purchasing manager and plant maintenance manager perspectives.

Determining the Costs of Residents

Determining the costs associated with a residency program is a very difficult and time-consuming process. Programs have not had to shoulder this responsibility in the past. With costs increasing because of the shortage of trainees and with ever-decreasing reimbursements, it is important for training programs to understand exactly where their costs are located. Several publications have reported the overall costs of residency programs in terms of replacement costs. This is an important concept, but it is equally important to realize how the dollars are spent within the program. Only with this information will the programs be able to make management decisions regarding the education of the residents. This report explains the basic concept of activity-based costing and its application to residency education.

Optimization of Crew Configurations Using Activity-Based Costing

The goal of this research was to develop and illustrate a technique for finding the optimum crew configuration, from a range of possible configurations, assigned to complete a defined quantity of work in a timely and cost-effective manner. The concept of activity-based costing was used to define the scope of the work in terms of the activities to be accomplished and their associated productivity rates and cost of performance. These data are modeled as distributions of random variables. Past experience, as well as local job conditions, can be used to determine the values associated with these distributions. The temporal and logical relationships between the activities are established through a process flowchart. An activity based, stochastic simulation program (ABC-SIM), was used to measure the elapsed time and activity cost for each of the candidate crew configurations. Excess cost is the activity cost minus the shift cost, which is based on the number of full shifts required to accomplish the work multiplied by the cost per shift. Excess cost is a measure of inefficiency caused by crews waiting in queue. Finally, an optimum crew configuration can be selected using an optimization rule that best satisfies project objectives.

Activity-based Costing (ABC) and the Life Insurance Industry

This paper describes the concept of activity-based costing (ABC) and examines its relevance to the life insurance industry. The paper contends that the high overheads and diversified product lines of many life insurance companies makes them appropriate environments within which to apply ABC. It is considered that ABC can provide at least three important benefits to a life insurance company, namely: more accurate cost information, closer insights into the costs of production and better information concerning the strategic consequences of business decisions. These attributes can help a life insurance company to achieve important business objectives, such as the management of expenses and the continuous improvement in the quality of its products and services. However; the transition to ABC is not easy and it cannot be seen as a panacea for all corporate woes. Nevertheless, the paper concludes that with sound project management, an ABC system can provide life insurance companies with much better information f...

Strategic investment analysis using activity based costing concepts and analytical hierarchy process techniques

An increasing number of organizations are using Activity Based Costing (ABC) to gain insight into manufacturing activities and processes as well as product costing. The natural logic of ABC can also be applied to strategic decisions. This paper presents a methodology that ties investment decisions to ABC concepts using the Analytical Hierarchy Process (AHP). By using AHP, both monetary and non-monetary benefits can be included in the analysis. First, the relationships between goals, activities, cost, and performance measures are developed, then they are combined to make two models: a cost impact model and a performance impact model. The final selection is made using a cost vs performance graph. The goal of the decision process is to evaluate investment alternatives based on their impact on activities and their contribution to organizational goals.