Easy as ABC: Activity-based costing assigns costs to activities for greater efficiency

Aug. 15, 2002
Use activity-based costing to get a more rational picture of your operations.

According to one source, activity-based costing (ABC) "is an accounting methodology that assigns costs to activities rather than products or services."

ProSci, Loveland, Colo., posted an article, Activity Based Costing (ABC): What is it and how can reengineering teams use it?, at http://www.prosci.com/abc1.htm. This page offers a basic concept of ABC, but the site gets more commercial.

A better approach to the ABCs of ABC is found with Narcyz Roztocki, Ph.D., Professor of MIS, State University of New York at New Paltz School of Business. Her PowerPoint presentation is at www.pitt.edu/~roztocki/abc/abc.htm. Start with Activity-Based Costing (ABC) and Economic Value Added Internet Web site Guide. Below that you'll find plenty of links to ABC and Economic Value Added both in English and other languages.

For more weighty reading, visit http://www.faa.gov/ait/bpi/handbook/ for the Federal Aviation Administration's Office of Information Technology Business Process Improvement Program's Handbook of Standards and Guidelines. I direct you attention to Chapter 5.

Free software

One project you will find at http://www.gnu.org/projects/gnue/gnue.html is GNU Enterprise, software includes the ability to work with ABC.

Hearing is believing

Whereas most Web sites rely on countless pages of eyeball-numbing text to deliver content, the tag line for PC Radio is "Sound information on the Net!" The site, at http://www.pcradio.com/otr/strategy.html, offers audio recordings of interviews. You'll need RealAudio, software to access Easy as ABC at the bottom of the business strategy and management section.

Shareware

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Winsite Specialty Archives offers tmact200.zip, a package that captures ABC data by running a timer for whichever project or task the user selects and then stores the information in a database. Go to http://www.winsite.com/win95/access/page5.html and look near the bottom of the page.

Free ABC magazine

The Home of Activity Based Costing Information, Community & Software is found at http://www.offtech.com.au/abc/Home.asp. Don't waste your time researching the software part. Instead, look on the left side of the page for the link to the free ABC magazine that's available in a PDF format.

Management accountants

The Institute of Management Accountants posts its Practices and Techniques: Implementing Activity-Based Costing, which addresses ABC implementation from the consultant's perspective. Visit URL, http://www.imanet.org/ontent/Publications_and_Research/Statements_on_Management_Accounting/imabc.htm, to see how accountants go about establishing an ABC system.

Best for last

ABC Guidebook: Guidebook for Using and Understanding Activity-Based Costing is the full text of a guidebook written for the Department of Defense on activity-based costing methodology and application. Check it out at http://www.c3i.osd.mil/bpr/bprcd/0201.htm

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