Scholarly Research Paper from the year 2004 in the subject Business
economics - Accounting and Taxes, grade: 2, Glynd r University,
Wrexham known as NEWI (Business school), 5 entries in the
bibliography, language: English, abstract: During the last decades
there was a change in organisations from managing vertical to
managing horizontal. The organisations started to become process
orientated instead of function orientated, and new management
styles, like total quality management, just in time, benchmarking,
or business process reengineering appeared. Which lead into an
increase of overheads. (Drury 2004a) The most important cost
factors changed from direct costs like labour costs or materials,
into indirect costs like set-up costs or administration costs.
Therefore the traditional costing systems became more or less
useless, because they presented poor cost information, which leads
into decision errors. Therefore the ABC- system of cost calculation
seems to be a solution. The most important difference between
traditional systems, and the ABC system, is the breakdown of
overheads. In traditional costing systems, they are divided into
cost centres, and accumulated products by using direct cost
drivers. In the ABC system, they will be assigned to activities,
which creates a greater number of cost centres with different cost
drivers. They will be accumulated to products in the percentage of
usage of an activity. In this paper the ABC-system of cost
calcualton is discussed and how it can be inplemented successfully
within an organisation. Attention is also trwon to the most
important failure in implementation of an ABC-approach, which
should be avoided. To establish an ABC-approach within an
organisation more than just a new calculation system is needed. An
ABC-approach has to be implemented in the management system (ABM)
and in the budgetting process (ABB). All in all, Activity based
costing is much more than juast a costing tool. Successfully
implemented it will h
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