Simulating Activitybased 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. Activitybased costing ABC allocates costs more accuratel...

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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:
Activitybased costing
Computer simulation
Cost accounting
Manufacturing industry
Online Access:Get full text
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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. Activitybased 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
DOI:10.1108/02635579410072126