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1

Abstract :

Activity-Based Costing (ABC) is strategic cost management system, developed in the 1980s to overcome some of

the limitations of traditional cost accounting and to enhance its usefulness to strategic decision-making. This paper

presents a framework to ABC system as strategic approach to costing management, by identify critical activities and

focus on activities that added value and then improve allocation process of resources.

Key words: Activity-based Costing, strategic cost management, strategic cost analysis

Activity-Based

Costing

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1

2

3

1Activity Based Costing

ABCR.CooperS.R Kaplan

1986Harvard Business School

Relevance LostR.Cooper S.R.KaplanT.Johnson

cost driver

T.C Horngren

cause-effect

ABC

ABC

cost pools

201617

1

Source: Narcyz Roztocki et al, A Procedure for Smooth Implementation of Activity Based Costing in

Small Company, Publication of State University of New York at New, Paltz/ Department of Business

Administration, NY 12561, U.S. 1999, p.2.

2ABC

ABCR.Cooper

hierarchies of activities

1.2unit level activities

2.2batch-level activities

material

movementsset-ups customer Orders

triggered

1

1

2 3

1 2 3

B A

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3.2product-sustaining activities

customer-sustaining activities

maintainingupdating

special testing

4.2facility sustaining activities

2

2ABC

ABC

ABC

Source: Falconer Mitchell, A Commentary on the Application of Activity-Based Costing,

Management Accounting Research, N° 5, 1994, p.263.

201619

1hierarchies of activities

unit level driver

batch level driver

product level driver

facility level driver

3ABC

ABC

costhierarchies

1.3output unit-level costs

C. T Horngren

2.3batch level costs

C. T Horngren

procurement batch costs

delivery batch costs

task batch

a hand-off-batch

external inspection

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3.3product sustaining cost

C. T Horngren

4.3Facility sustaining cost

C. T Horngren

4

ABC

201621

RaffishTurneyevent

.

ABC

ABC

cause

effectABC

Turneycost view

process viewABC

201622

3ABC

5

Simmonds " "1981

Shank & Govindarajan

Source: Robin Cooper, Robert S.Kaplan, The Design of Cost Management Systems,

Prentice Hall, New Jersey, United State of America,1998, p.281.

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insourcing

outsourcing

Wilson

1

6

Source: John K. Shank, Strategic cost management: new wine or just new bottles? J. Manage. Account. Res. 1, 1989,

P.62, and Shank, J.K., Vijay Govindarajan, 1992. Strategic cost management: the value chain perspective. J. Manage.

Account. Res. 4, P.196.

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operational benefitsstrategic benefits

TQM

what things cost

benchmarking

R.CooperS.R.KaplanABC

KaplanJohnsonABC

201625

1 S.Robert Kaplan, Management Accounting (1984-1994): Development of New Practice and Theory,

Management Accounting Research, 5, 1994, p.248-249. 2 Kyoung- Jac Kim, Ingoo Han, Nonlinear Cost Allocation Base on Optimal Cost driver Set in Activity

Based Costing: Using Hybrid Genetic Algorithms and Artificial Neural Net Works, Fall Conference on

Korea Expert Systems Society, 1998 , p.2. 3 T .Charles Horngren, Cost Accounting: A Managerial Emphasis, Prentice Hall International, Inc, 2001,

p.196. 4 Wiriya Chongruk Sut, The Adoption of Activity Based Costing in Thailand, A Thesis for the Degree of

Doctor of philosophy, Victoria University, June 2002, p.10. 5 S.Robert Kaplan, op. cit, pp.249-251.

6 Derya Eren Akyol et al, An Analysis of Activity Based costing in a Manufacturing System, International

Journal of Information Technology, Volume1, N°1, 2004, p.54. 7Yong-Wov Kim, Glenn Ballard, op. cit, p.5-6.

8 Colin Drury, Cost and Management accounting an Introduction, 6

nd Edition, Thomson Learning,

London, United Kingdom, 2006, P.360. 9 Yves Dupuy, Denis Travaillé, op. cit, P.178.

10 Henry Martin, op. cit, P.239.

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proceeding of the 9th Annual Conference of the International Group for Lean Construction, National

University of Singapore, August, 2001, P.7. 12

K.Donald Tham, Marks Fox, op. cit, PP.310-311. 13

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study perspectives, Management Accounting Research 14, 2003, P.256 14

Simmonds, K., “Strategic Management Accounting for Pricing: A Case Example”, Accounting and

Business Research, Vol. 42, 1982, pp. 207. 15

John K. Shank, Strategic cost management: new wine or just new bottles? J. Manage. Account. Res. 1,

1989, P.50, 16

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Strategies, practices, and benefits, Journal of Purchasing & Supply Management, 14, 2008, 180.

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Robin Roslender, Susan J. Hart, Integrating management accounting and marketing in the pursuit of

competitive advantage: the case for strategic management accounting. Crit. Perspect. Account. 13, (2),

2002, 256. 18

Monte R. Swain, Stanley E. Fawcett, Innovation in competitive manufacturing, chapter 31, American

Management Association International, 2002, P.385-386. 19

D. Rajive Banker et al, The Role of Manufacturing Practices in Mediating the Impact of Activity-Based

Costing on Plant Performance, Accounting, Organization and Society, N° ××× ,2007, pp.1-5. 20

Stane Brignall, A Contingent Rationale for Cost System Design in Services, Management Accounting

Research, N° 8, 1997, p.330. 21

Arthure Andersen's, Activity-Based-management: Lessons from the ABM Battlefield, 2nd

Ed, John

Wiley & Sons, Inc, New York, 1999, p.4. 22

Tommi Lahikainen et al, Implementing Activity Based Costing in Enterprise Resource Planning

System, Publications of the Tampere University of technology, Finland, 2000, p.5. 23

Wiriya Chongruksut, op.cit, p.48-53. 24

John Innes, Falconer Mitchell, op. cit. p.139.