Activity-Based Costing (Abc); Hunter Company
Activity-based Costing (ABC) Hunter Company
Emmanuel Achirem
ACC 560-Managerial Accounting
Dr. Lotfi Geriesh
Strayer University
08/04/2012
Activity-based Costing (ABC) Hunter Company, 1
Introduction
Over the past two decade’s adoption of Activity-Based Costing ABC has been tossed around like a hot potato by every size and type of organization. It was adopted by organizations ranging in size from huge multi-national companies like General Motors to the much smaller Alexandria Hospital. (Lanen, Anderson, & Maher, 2011) Some companies began the initial processes but stopped short of actual implementation when they discovered more time and resources were needed to effect the change so management ran from it just as they had run from quality improvement concepts from the seventies and eighties. (Romano, 1990) Was this because ABC was not a good fit for the organization or was there a deeper issue? These organizations knew they were not adequately capturing the costs of activities yet they final cost could be. T.J Rodgers who founded Cypress Semiconductor wrote: “The seeds of business failure are sown in good times, not bad…Growth masks waste, extravagance, and inefficiency. The moment growth slows, the accumulated sins of the past are revealed all the way to the bottom line.” (Clemmer, 1992) Given the competitive nature of business today organizations both big and small cannot long afford to ignore the 900 pound gorilla in the room.
The goal of this paper is to discuss Time-driven ABC cost system can be implemented and how it has benefited some companies such as Hunter Company. The system was not widely accepted in the beginning, but ABC has play major role in cost accounting today and has help some managers to combat corporate resistance to change when trying to implement it.
Operating managers have known for many years that while the traditional costing approach was inaccurate; and archaic it was close enough. Today, because of the
Emmanuel Achirem
ACC 560-Managerial Accounting
Dr. Lotfi Geriesh
Strayer University
08/04/2012
Activity-based Costing (ABC) Hunter Company, 1
Introduction
Over the past two decade’s adoption of Activity-Based Costing ABC has been tossed around like a hot potato by every size and type of organization. It was adopted by organizations ranging in size from huge multi-national companies like General Motors to the much smaller Alexandria Hospital. (Lanen, Anderson, & Maher, 2011) Some companies began the initial processes but stopped short of actual implementation when they discovered more time and resources were needed to effect the change so management ran from it just as they had run from quality improvement concepts from the seventies and eighties. (Romano, 1990) Was this because ABC was not a good fit for the organization or was there a deeper issue? These organizations knew they were not adequately capturing the costs of activities yet they final cost could be. T.J Rodgers who founded Cypress Semiconductor wrote: “The seeds of business failure are sown in good times, not bad…Growth masks waste, extravagance, and inefficiency. The moment growth slows, the accumulated sins of the past are revealed all the way to the bottom line.” (Clemmer, 1992) Given the competitive nature of business today organizations both big and small cannot long afford to ignore the 900 pound gorilla in the room.
The goal of this paper is to discuss Time-driven ABC cost system can be implemented and how it has benefited some companies such as Hunter Company. The system was not widely accepted in the beginning, but ABC has play major role in cost accounting today and has help some managers to combat corporate resistance to change when trying to implement it.
Operating managers have known for many years that while the traditional costing approach was inaccurate; and archaic it was close enough. Today, because of the
References: C. Argyris and R. S. Kaplan, “Implementing New Knowledge: The Case of Activity-Based Costing," Accounting Horizons (September 1994): 83-105. Journal of Cost Management (Winter 1989): 34-46; R. Cooper and R. S. Kaplan, “Measure Costs Right: Make the Right Decisions,” Harvard Business Review (September-October 1988). http://www.hbs.edu/research/facpubs/workingpapers/papers2/0304/04-0