Huruf Is It Continue to Relevant?
Activity-Based Costing: Would it be Still Relevant?
BY WILLIAM O. STRATTON, PH. G., CMA; BLIKTIS DESROCHES; RAEF A. T AW T O N, P H. D., C M A, C PENNSYLVANIA, C FA; A N D To O W Y H AT C H
POPULARITY OF ACTIVITY BASED BEING -
GREW SWIFTLY DURING THE
IN THE PURSUING DECADE, MANY SURVEYS REPORTED USAGE RATES OF PREVIOUS
50%. IN THE
YET , THERE HAS BEEN DEBATE ABOUT THE
OVERALL RELEVANCE OF THIS COSTING METHOD. TO CHECK INTO THE CURRENT IMPORTANCE OF WIDE.
FONEM, WE EACH OF OUR
MANUFACTURING AND SERVICE BUSINESSES WORLD-
OUTCOMES INDICATE THAT
IS CONSTANTLY ON THE OFFER AGENCIES
SIGNIFICANT BENEFIT FROM STRATEGIC AND OPERATIONAL PERSPECTIVES.
ver the past several years, consultants, practitioners, and academic investigators have noticed that activity-based priced at (ABC) strategies, developed to improve decision support and the accuracy of cost- and profit-measurement systems, too often have produced less than the desired results. For example , Robert H. Kaplan and Steven R. Anderson state, " Many businesses abandoned activity-based costing as it did not record the complexness of their functions, took very long to put into action, and was too expensive to generate and maintain. вЂќ1 Further criticism of ABC appeared somewhere else. " Straightforward in theory, FONEM proved infamously difficult in practice. It engaged defining вЂactivities' and trying to guage (often subjectively) how much cost to do business each applied. And it had to be performed regu-
larly. Companies received fed up, and many abandoned this. From eleventh position in the 1995 total annual survey of the most widely used managing tools (Bain), it droped to twenty second place (in 2002). вЂќ2 Studies of ABC work with have shown this dissatisfaction with the strategy. The Baignade & Company annual tools surveys in 2003 and 2005 reported use of activity-based management (ABM) at fifty percent and 52%, respectively, with associated pleasure scores below the average for any tools applied. Similar results were reported in the SUNYAlbany, Hyperion, and Pepperdine Study (SHAPS surveys): Through the same period, they found a decrease in the identified value of ABC when compared to its use. 3 Despite the negative outcomes of these research, there are many case studies and anecdotal information of organizations that have adopted ABC methods and reported sat-
Meters A D A G E M E N T A C C O U N To I D G Queen U A R Capital t E L LY
SPRING 2009, VOL. 12, NO . several
isfaction together with the value they supply. These companies consider their FONEM methods an investment worth time and assets committed to all of them. One purpose for performing this study was to seek an answer to problem: " What distinguishes powerful implementations of ABC strategies from people with not prevailed? вЂќ N R AG S U R Versus E Y
Demographics of Survey Respondents
North America The european countries Middle East Asia The african continent South America 52. 1% 13. 9% 12. 8% doze. 1% six. 8% installment payments on your 4%
Simply by geographic area:
In order to analyze the use of HURUF methods (and other problems related to the style and utilization of costing and profitability methods), we shaped the Business Research and Examination Group (BRAG) and carried out a review sponsored by the Institute of Management Accountancy firm (IMAВ®) and also other professional interactions. 4 Desk 1 displays the distribution of survey respondents simply by region, type of unit, and business sector. Of the 348 survey participants, slightly more than half had been located in United states. The study was accomplished most frequently through the perspective with the respondent's corporation as a whole. Fifty-four percent with the respondents were in the services sector, and 40% were from production. The positions held by simply respondents were fairly evenly distributed among management (16%), owners (13%), elderly managers (16%), analysts (19%), managers (23%), and others (14%). C U S SCHMUCK
By company level: Complete company Group/division Department Subsidiary Plant Unit Branch Different By organization sector: Services...