Traditional Activity-based Costing Research Articles

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.

Time-Driven Activity-based Costing for Anterior Cruciate Ligament Reconstruction: A Comparison to Traditional Accounting Methods

PurposeThe primary purpose of this study was to compare the cost of care of one of the most common sports medicine surgical procedures, anterior cruciate ligament reconstruction (ACLR), using the time-driven activity-based costing (TDABC) method to traditional accounting methods such as activity-based costing (ABC). Our secondary purpose was to identify the main drivers of the cost of ACLR using both of these techniques.MethodsA process map of ACLR was constructed through direct observation in the clinical setting according to established techniques to identify drivers of fixed, direct variable, and indirect costs. An episode of care consisted of each step in the surgical process from admission to discharge. Personnel costs were combined with the process map to determine the cost drivers and overall cost of the procedure. The cost generated from the TDABC method was compared with the cost from our institution’s internal accounting system, which used an ABC method.ResultsThe total cost of ACLR was $5,242.25 when using TDABC versus $10,318 when using the traditional ABC method. The largest difference between the 2 methods was within the domain of direct variable costs.ConclusionsWhen compared with TDABC, the hospital’s traditional cost-accounting estimate for ACLR is nearly twice as costly. These findings highlight the variability of cost calculation for the same clinical episode between the 2 accounting methods. For the traditional accounting method, the direct variable cost was the main cost driver, whereas for the TDABC method, the direct fixed cost was the main cost driver.Clinical RelevanceThis study is important because it elucidates important cost drivers for one of the most common sports medicine orthopaedic surgical procedures and attempts to identify the true overall cost of the procedure.

A Comparative Study of Traditional Activity-based Costing and Time-driven Activity-based Costing at a University Hospital in South Korea

Due to serious problems associated with activity-based costing (ABC), time-driven activity-based costing (TDABC) was recently suggested as a better alternative. TDABC is designed to enhance the objectivity of data collection and decrease time and cost as well. However, the accuracy of the allocated costs using TDABC has not been widely tested yet, particularly in the healthcare industry. The objective of this study is to review the differences between ABC and TDABC and apply both techniques to a university hospital in South Korea to evaluate the results of cost allocation of outpatient nursing activities in Pediatrics Department. It is shown that the allocated costs are not very different between the two techniques, which implies that TDABC can be effectively used to compute the cost of each patient accurately. The result of this study also demonstrates that, using TDABC, the visibility of unused resources will be improved at all levels of management in the hospital, and non-value added activities can be managed effectively using the information regarding the activity ratios of traditional ABC and TDABC. In addition, it is shown that the accurate cost report to each doctor can provide a motivation for doctors to improve their profitability. Keywords : Activity-based costing; Time-driven activity-based costing, health care industry DOI : 10.7176/RJFA/10-10-01 Publication date :May 31 st 2019

PENENTUAN HARGA JUAL KAMAR MELALUI IMPLEMENTASI ACTIVITY BASED COSTING SYSTEM PADA PT TASIK RIA RESORT MANADO

Development services company primarily in the field of tourism and hospitality, led to increasing competition among hotels. Because it takes strategy to excel in competing, by minimizing and calculate the cost of production effectively so that the selling price is low. The lower the selling price of the product into a high sales rate. Method of activity based costing (ABC) is very effective in determining the slling price, because ABC is a method of charging is to charge and collect a fee based activities based on the behavior of existing activities. This study aims to: (1) obtain the calculation result by using ABC method in determining the selling price of room at PT Tasik Ria Resort Manado (2) to compare the selling price of room at PT Tasik Ria Resort Manado using traditional accounting method and ABC. The method of analysis used in this research is descriptive method of comparative and the type of research used is descriptive qualitative. The results obtained that there is a difference between the selling price of PT Tasik Ria Resort Manado and ABC selling price, where the calculation of ABC in the rom types Pool View, Sea View and Grand Sea View rooms gives a smaller result than the selling price set by the management. While in the room type Garden View ABC calculation is higher than the sale price of rooms that have been set by the hotel management.Keywords: Activity Based Costing, Activity, Selling Price of Room

The Modified Activity-Based Costing Method in Universal Postal Service Area: Case Study of the Montenegro Post

The 3rd EC Postal Directive proposes a calculation approach to separately determine the net cost of universal service obligation. Also proposes presence of liability to compensate the universal service provider. In this paper, authors have presented the necessity of compliance with Postal Directives through application of the activity-based costing method for costs calculation related to the universal postal operator. The objective of this paper is to research the possibility of modification of the existing, traditional ABC method. Method will improve the quality of cost accounting of the universal postal operators. The aim is to present the implementation of the modified activity-based cost accounting method from the point of view of a universal postal service. Conceptual framework for the modified activity-based costing in the area of universal postal service has been developed and applied in the Montenegro Post. This modification of the traditional activity-based costing, called the modified activity-based costing, for solving specific accounting problems in a universal postal service area, is the main contribution of the paper. As long as the modified ABC method is not created and implemented, the Montenegro Post has been unable to adequately respond to the established legal requirements. The presented method can be a guide for other postal companies with matters concerning the calculation of costs and revenues.DOI: http://dx.doi.org/10.5755/j01.ee.26.2.2818

Discussion on the Application of Activity-Based Costing in Virtual Manufacturing Cell Mode

As a new development of cell manufacturing mode, virtual manufacturing cell (VMC) has complied with the new production organization requirements of current production efficiency and production flexibility improving synchronously, and it presents new characteristics in terms of cost accounting and cost control. Traditional cost methods present some shortcomings in VMC mode. For these situations, this paper discusses the advantages of activity-based costing (ABC) in VMC mode and improves traditional ABC to better meet the cost accounting requirements of VMC. Finally, an example is used to illustrate the basic use of the improved ABC in VMC mode.

English

  The traditional activity based costing (ABC) can be used as a more powerful and accurate pricing tool if integrated with economic value added (EVA), a value-based financial performance measure. The paper is targeted to discus the integrated ABC-and-EVA system that is considered as an engineering management tool used successfully to manage both cost and capital. It allows enterprise leaders to create shareholders value through cost structure improvement. In this integrated system, the cost of activities includes an equitable charge for the consumption of resources at one end and charge for capital demanded and used at the other end. The implementation process of the system is discussed and a comparison with the traditional ABC system is made to make it simple and decisive to the users. The process starts with the identification of activities and then income statement and balance sheet data is adjusted in line with EVA approach. This information is then transformed into transparent capital charges using activity-capital dependence (ACD) analysis, which has been added with the costs of each activity to have integrated total costs. The paper concludes with a discussion of possible changes to corporate strategies and business performance when the integrated ABC-and-EVA system is implemented in a manufacturing company for pricing their products.   Key words: Activity-based costing (ABC), economic value added (EVA), residual income (RI), activity-capital dependence (ACD), engineering management tool.

A new process-based cost estimation and pricing model considering the influences of indirect consumption relationships and quality factors

In a manufacturing environment containing complex consumption relationships and quality influences, the application of traditional activity-based costing (ABC) method is limited. In this paper, a new improved process-based model for cost estimation and pricing is presented. Through utilizing the input–output analysis method, the complex indirect consumption relationships (such as reciprocal relationships) of a manufacturing system are expressed. By solving these relationships, the consumption characteristics of all production activities (mainly presented by the activity rates) are extracted. Then with the consumption characteristics, the quality characteristics and usage amounts of these activities, the cost prices of products are estimated for their pricing. A case study is given based on the compressor products of a manufacturing company, and its effectiveness is shown. As the cost influences of complex consumption relationships and quality factors are fully considered, the proposed approach has a higher estimation accuracy than the traditional ABC method.

Activity-Based Costing (ABC) and Time-Driven Activity-Based Costing (TDABC): Applicable Methods for University Libraries?

Objective – This article provides an overview of how university libraries research and adapt new cost accounting models, such as “activity-based costing” (ABC) and “time-driven activity-based costing” (TDABC), focusing on the strengths and weaknesses of both methods to determine which of these two is suitable for application in university libraries.
 
 Methods – This paper reviews and summarizes the literature on cost accounting and costing practices of university libraries. A brief overview of the history of cost accounting, costing, and time and motion studies in libraries is also provided. The ABC and the TDABC method, designed as a revised and easier version of the ABC by Kaplan and Anderson (Kaplan & Anderson 2004) at the beginning of the 21st century, as well as the adoption and adaptation of these methods by university libraries are described, and their strengths and weaknesses, as well as their suitability for university libraries, are analyzed.
 
 Results – Cost accounting and costing studies in libraries have a long history, the first of these dating back to 1877. The development of cost accounting and time and motion studies can be seen as a natural evolution of techniques which were created to solve management problems. The ABC method is the best-known management accounting innovation of the last 20 years, and is already widely used in university libraries around the world. However, setting up an ABC system can be very costly, and the system needs to be regularly updated, which further increases its costs. The TDABC system can not only be implemented more quickly (and thus more cheaply), but also can be updated more easily than the traditional ABC, which makes the TDABC the more suitable method for university libraries.
 
 Conclusion – Both methods are suitable for university libraries. However, the ABC method can only be implemented in collaboration with an accounting department. The TDABC method can be tested and implemented by separate departments, and thus can contribute to the provision of better and more effective library services at lower costs. However, the involvement of experts in costing and accounting is recommended.

Analysis of Cost and Efficiency of a Medical Nursing Unit Using Time-Driven Activity-Based Costing

Time-driven activity-based costing was applied to analyze the nursing activity cost and efficiency of a medical unit. Data were collected at a medical unit of a general hospital. Nursing activities were measured using a nursing activities inventory and classified as 6 domains using Easley-Storfjell Instrument. Descriptive statistics were used to identify general characteristics of the unit, nursing activities and activity time, and stochastic frontier model was adopted to estimate true activity time. The average efficiency of the medical unit using theoretical resource capacity was 77%, however the efficiency using practical resource capacity was 96%. According to these results, the portion of non-added value time was estimated 23% and 4% each. The sums of total nursing activity costs were estimated 109,860,977 won in traditional activity-based costing and 84,427,126 won in time-driven activity-based costing. The difference in the two cost calculating methods was 25,433,851 won. These results indicate that the time-driven activity-based costing provides useful and more realistic information about the efficiency of unit operation compared to traditional activity-based costing. So time-driven activity-based costing is recommended as a performance evaluation framework for nursing departments based on cost management.

Primary Research of the Advantages and the Cost Control of the ABC & EVA Integrated System

The integrated product of Activity-Based Costing (ABC) and Economic Value Added (EVA) is the ABC & EVA system, i.e. the integrated cost system. Traditional ABC method gives priority to the interior activity chain of enterprise to implement the cost analysis, but ignores the capital cost, so the cost accounting is not complete. The ABC & EVA system brings the capital cost into the cost management, which could not only open out the real economic value created by the cost objects, but extend the pure cost computation of ABC to the performance evaluation. Based on the principle of the ABC & EVA system, the enterprise cost control strategies under the integrated cost system are proposed.

INTEGRANDO O CUSTEIO BASEADO EM ATIVIDADES COM A TEORIA DAS RESTRIÇÕES: A APLICAÇÃO DO ABC OPERACIONAL EM UMA ODONTOCLÍNICA

RESUMO O custeio baseado em atividades (ABC) tem sido criticado por sua incapacidade de dar suporte às decisões de produção baseadas no curto prazo, sendo, por isso, considerado uma sistemática de alocação de custos para o longo prazo. Robert Kee, no artigo “Evaluating the economics of short-and long-run production decisions”, desenvolve um modelo de ABC, denominado operacional, que incorpora custos flexíveis de recursos de atividades e restrição de capacidade para decisões de mix ótimo de produção no curto prazo. Ao apresentar um exemplo numérico hipoté- tico, Kee mostra que seu modelo de ABC operacional apresenta, no curto prazo, resultados superiores ao modelo de ABC tradicional e a outro modelo de ABC que leva em conta tão-somente a restrição de capacidade. O presente artigo analisa o modelo proposto por Kee (2001) mediante sua aplicação em uma odontoclínica da administração pública federal, comparando os resultados obtidos pela referida sistemática com os encontrados pelo ABC tradicional e pela teoria das restrições (TOC), aplicados à mesma organização, concluindo pela superioridade do modelo de Kee.

Pecos Products: A Project Introducing Complexity into the Study of Activity-Based Costing

This case is designed to help students gain a more thorough understanding of activity-based costing (ABC) than is usually obtained in introductory managerial accounting courses. If you have taken such a course, you have probably seen, in general, simple examples of activity-based costing. However, ABC can be more complex than these examples indicate for three reasons: (1) the mechanics of ABC are far more complex than these simple examples indicate; (2) many of the design choices required in an ABC system, which are critical to the cost-benefit decision, are omitted from the simple examples; and (3) without adequate detail, it is hard to see how economic consequences arise from the choice of costing systems. The Pecos Products ABC Design Project (the “project”) addresses these issues by providing a hypothetical company with a detailed business scenario and asking you to help with the cost-system-design decision. To accomplish this, you will have to think about traditional cost system and ABC design issues, delve deeply into the cost system mechanics, and evaluate the benefits (economic consequences) of an ABC system in light of the cost and effort required to create it.

Extending simulation modeling to activity-based costing for clinical procedures.

A simulation model was developed to measure costs in an Emergency Department setting for patients presenting with possible cervical-spine injury who needed radiological imaging. Simulation, a tool widely used to account for process variability but typically focused on utilization and throughput analysis, is being introduced here as a realistic means to perform an activity-based-costing (ABC) analysis, because traditional ABC methods have difficulty coping with process variation in healthcare. Though the study model has a very specific application, it can be generalized to other settings simply by changing the input parameters. In essence, simulation was found to be an accurate and viable means to conduct an ABC analysis; in fact, the output provides more complete information than could be achieved through other conventional analyses, which gives management more leverage with which to negotiate contractual reimbursements.

Integrating Activity-Based Costing and Economic Value Added in Manufacturing

This article presents a cost and perfonnance measurement system that integrates activity-based costing (ABC) with the economic value added financial perfonnance measure. This proposed ABC-and-EVA system is a management support tool for managing costs and capital. The integrated ABC-and-EVA system includes the rate of resource consumption (like traditional ABC), but it also includes capital demand. Implementation steps are illustrated. A traditional ABC system is compared with an ABC-and-EVA system by examining the cost for each activity at the first stage. A firm's capital information is then transformed into transparent capital charges using a newly developed method called activity-capital dependence (ACD) analysis. Changes to the end-product costs and possible changes to corporate strategies and business perfonnance in the proposed ABC-and-EVA system are discussed.