Simulating Activity-based Costing

Many traditional cost accounting methods can result in distorted cost information as they allocate overheads in proportion to labour. This can result in a low technology product being overcosted and a high technology product being undercosted. Activity-based costing (ABC) allocates costs more accura...

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Bibliographic Details
Published in:Industrial management + data systems 1994-11, Vol.94 (9), p.3-8
Main Authors: Helberg, C, Galletly, J.E, Bicheno, J.R
Format: Article
Language:English
Subjects:
Accounting
Activity based costing
Banks
Computer based modeling
Computer simulation
Cost accounting
Cost allocation methods
Departments
Design
Distribution costs
Engineering
Impacts
Institutional investments
Insurance companies
Manufacturing
Marketing
Overhead costs
Production costs
Securities markets
Software
Software packages
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Summary:Many traditional cost accounting methods can result in distorted cost information as they allocate overheads in proportion to labour. This can result in a low technology product being overcosted and a high technology product being undercosted. Activity-based costing (ABC) allocates costs more accurately and pinpoints areas of waste. Describes software which provides a tutorial introduction to ABC and highlights the difference between ABC and conventional cost accounting by means of simulating a production environment for the user to explore. The simulator should foster improved understanding of the opportunities of ABC.
ISSN:0263-5577
1758-5783
0263-5577
DOI:10.1108/02635579410072126