Integrating Activity-Based Costing （ABC） and Theory of Constraint （TOC） for Improved and Sustained Cost Management

Implementing effective cost management approaches has recently gained momentum due to intense competition and increasing customer demands. Moreover, effective cost management approaches have contributed to firms＇ competitive advantage in relation to cost leadership strategy. Consequently, firms have implemented contemporary cost management systems, such as activity-based management, business process re-engineering, life-cycle costing, target costing, and theory of constraint （TOC）, to enable them to become low-cost producers and compete effectively and sustain their performance. Furthermore, focusing on cost management to improve profitability has led to the integration of activity-based costing （ABC） and TOC. Therefore, the aim of this study is to review literature and discuss how integration of ABC and TOC can result in improved and sustained cost management. While these methods have different approaches in addressing cost management, treating them as complementary cost management approaches can result in improved cost management due to improved product costing, improved cost reporting, improved product-mix decisions, and improved cycle-time management. Improvement in cost management will then result in sustained cost management. Sustained cost management is further enhanced with the investment in information customer and shareholder value technology that supports cross-functional decision making to continue creating to remain competitive in the market.

An improved activity-based costing model for product cost estimation applied in a complex manufacturing environment

In order to evaluate and estimate me cosEs oi prouuct~ plt, uu^u e vironment properly, an improved activity-based costing （ABC） model is presented. By utilizing the input-output analysis method, the complex consumption relationships in a complex manufacturing environment are first expressed. The consumption characteristics （mainly presented by the activity rates） of all production activities are extracted by solving these relationships. Then with the con- sumption characteristics and operating parameters of these activities, the detailed cost consumption of a product in its manufacturing process is estimated. A case study is finally given based on the compressor products of a manufacturing company, and its effectiveness is shown. As the cost influ- ence of complex consumption relationships is fully considered, the limitation of traditional ABC method is overcome, and therefore a high accuracy in product cost estimation under the complex manufacturing environment can be achieved.

Activity-Based Costing of Library Services in Universities——A Case Study of a Private University

An organization’s costing system is a system that helps the management with the strategy planning while the system plays an important role in providing accurate cost information about the products and customers.In other words,the costing management system is important to provide timely and quality information to help managers in their decision-making process.Producing quality graduates is the main objective of any university and the cost of quality or the cost of poor quality is one that is often difficult to measure in higher education.This can be partly attributed to the fact that most accounting systems are not structured to capture important cost-of-quality information.In order to succeed,many organizations tend to shift from conventional or traditional costing system to Activity-based costing(ABC).ABC provides both higher education administrators and policymakers with better information on which to base decisions.The use of multiple cost pools and drivers under ABC leads to more detailed and accurate product costing than that provided by traditional cost systems.This paper attempts to investigate the possibilities and limitations of implementing ABC in universities.More specifically the study makes use of the case study method to illustrate the implementation of activity-based costing of library services in a private university in the Kingdom of Bahrain.The research methodology of the case study is a combination of both descriptive and quantitative analyses.The study identified six categories of cost pools which are related to the activities of the library as well as 17 relevant cost drivers.Accordingly,ABC should lead to a better understanding of what drives costs and,by extension,what changes are necessary to reduce costs.Unnecessary activities that do not add value to services can be identified and eliminated.Further ABC is feasible in an academic library and that much can be gained from the process of analyzing activities.However,more work needs to be done in terms of designing accounting and other information systems to capture cost and activity transaction data in a more routine and disaggregated form for ABC analysis.

A Study on Cost Control of Agricultural Water Conservancy Projects Based on Activity-based Costing

Based on the theory of activity-based costing and the idea of value chain,activity optimization and cost control are carried out on the whole construction process of agricultural water conservancy projects. Through the use of literature review,case analysis and statistical analysis and other methods,with agricultural water conservancy projects as the research object,and comparing activity-based costing with the traditional model of cost accounting,the writer carries out the corresponding value chain analysis,and comes to the following conclusion: the statistical calculation and analysis of the entire construction process based on activity-based costing can accurately and effectively control the costs of water conservancy projects. Through the use of activity-based costing,the cost data of agricultural water conservancy projects is more detailed and accurate,and cost management personnel can also find non-value-added activities,optimize the enterprise's value chain and achieve cost control objectives through the analysis of the activity chain and value chain of agricultural water conservancy projects.

Modem Cost Management in the Transport Company Through the Activity-Based Costing （ABC） Method

Road transport is a flexible mode of transport and its importance in era of globalization increases. Management of road transport companies is, in this turbulent environment, exposed to many technical, legislative, and economic problems. Especially, the growing economic pressure leads to an urgent requirement of the manager and control system improvement. Activity-based costing （ABC） method is a very powerful tool to improve products, services, processes, and market strategies. ABC allows company management to understand what causes costs and how to manage them. Company under this scheme may get a glimpse of how efficiently a company converts the source value. The main objective of our research was to assess the possibility of application of the ABC method in a transport undertaking. ABC method as a fundamentally different view on the cost in the transport business helps to find the reasons of cost and thereby influences their levels to make better use of resources.. New managerial accounting methods aim to show management what information is needed, how and where this information can be obtained, and how they can be useful for the management of the company＇s proper planning, decision-making, and control. Information provided by management accounting is often a key factor in the analysis of alternative ways of solving problems. This article focuses on the transport enterprise management and helps to decide on the use of this method in business practice.

Study on the Application of Time-Driven Activity - Based Costing in Hotels——Taking a Hotel as an Example

The time-driven activity-based costing has received extensive attention from scholars both at home and abroad in recent years,which has been applied to the calculation of manufacturing operations and the cost of products.However, this approach is rarely introduced into the service sector.As to the hospitality industry, the profitability of the customer usually plays a decisive role in the business process.Therefore, this article takes the hotel service industry as the research point and allocates the costs of resources of each departments to customers according to time drivers.The focus of this paper is to calculate the costs of customers ,and then analyze the profitability of customers in order to take the appropriate marketing strategies to improve the hotel service industry Drofitabilitv.

Costing and Pricing in Healthcare Private Firms

This article analyzes the development of an activity-based costing （ABC） system in a private Italian healthcare firm. Findings shed light on the role of the cost accounting system in price assessment： It outlines new opportunities for the identification of the service mix offered as well as for price optimization. Because private companies provide services both within the public system--where the National Health System （NHS） provides fixed reimbursement fees--and within the private system--where prices are defined by each company. Accurate cost information is extremely important to support managers in the analysis of the service mix profitability offered in each system. For the business segment in which companies do not have flexibility in setting prices, cost information enables managers to identify services which may present profitability problems. For the business segment where price flexibility exists, cost information supports the identification of pricing errors so that charges can be better defined.

Research on selection methods of cost driver

In the implementation of activity-based costing, cost driver is the true reason to determine the occurrence of costs and the consumption of resources, and correctly selecting the cost driver is the key to calculating the cost of the product accurately. Beginning with the meaning of cost driver and its characteristics, this article analyses its classification, and then, focuses on its selection method.

A Pragmatic Approach to Product Costing Based on Standard Time Estimation

The major drawbacks of traditional approaches to product costing include lack of manufacturing knowledge, reliance on the detailed design description, poor cost function approximation and inability to update estimation algorithms by using actual cost data. Adopting the Activity-Based Costing (ABC) concept and based on estimated processing time, this paper proposes a pragmatic approach to product costing. The approach involves two stages, namely the preparatory stage and the estimation stage. A case study conducted in a refrigerator company is reported.

An Exploratory Study Into the Implementation of Management Accounting Changes in Australia

This paper is an exploratory study which investigates the introduction and implementation of management accounting changes in Australia. The study first examines the introduction of relatively new management accounting techniques in professional journals, conferences, workshops, and professional development programs over a four-year period in Australia. These are among the main sources of transferring information on cost and management accounting changes to potential users in Australia. The purpose of such a study is to get a clear picture of the scope and extent of recently developed cost and management accounting techniques introduced to practitioners in Australia. By identifying the major management accounting changes and developments faced by organizations, the study then investigates the extent of implementations of such changes in practice. The study further explores the hindering and facilitating factors contributing to the implementation of new management accounting changes in organizations.

Research on Rural Highway Project Construction Management and Maintenance

In this paper,combined with an actual case project,activity-based costing is used to analyze the labor costs,material costs,and the corresponding indirect costs(such as site management fees and taxes)where each cost is analyzed in detailed.Through quantitative comparison,it further determines which business activities are the key cost control objects and proposes targeted implementation plans for actual cost management in the future in order to provide new ideas for improving the implementation efficiency in addition to a reasonable cost control of highway engineering projects.At the same time,through analyzing the situation of highways,different maintenance modes are compared to put forward a more perfect rural road maintenance and management mode.

Evaluation of the economic impact of the robotic approach in major and postero-superior segment liver resections: a multicenter retrospective analysis

Background:Economic impact of robotic liver surgery(RLS)is still a debated issue due to the heterogeneity of liver resections considered and the lack of a rigorous methodology.Therefore,the aim of this study is to perform a time-driven activity-based costing(TD-ABC)comparing the costs of RLS,laparoscopic liver surgery(LLS)and open liver surgery(OLS)in the context of complex liver resections and to compare short term perioperative outcomes.Methods:The institutional databases of two Italian high volume hepatobiliary centres were retrospectively reviewed from February 2021 to April 2022.Patients submitted to major hepatectomies or postero-superior liver resections were selected and divided into three groups according to the approach scheduled(RLS,LLS and OLS)and compared.Major contributors of perioperative expenses were calculated using the TD-ABC model and accurately quantifying each unit resource consumed per patient and the time spent performing each activity.A primary intention-to-treat analysis(ITT-A)including conversions in the RLS and LLS groups was performed.Results:Forty-seven RLS,101 LLS and 124 OLS were collected.LLS and RLS showed reduced blood loss,morbidity,mortality and hospital stay compared with open.A trend towards reduced conversion rate in RLS compared to LLS was registered.Total costs associated with RLS were estimated at€10,637 vs.€9,543 for LLS and vs.€13,960 for OLS.The higher intraoperative costs associated with RLS(+153.3%vs.OLS and+148.2%vs.LLS,P<0.001),primarily related to surgical equipment expenses,were slightly offset by the postoperative savings(−56.0%vs.OLS and−29.4%vs.LLS,P<0.001)resulting from significantly reduced hospital stays.Conclusions:RLS offers economic advantages over OLS,as initial higher costs are offset by better perioperative outcomes.The evolving robotic marketplace is expected to drive down RLS costs,promoting widespread adoption in minimally invasive procedures.Despite its higher costs than LLS,RLS’s ability to enhance minimally invasive feasibility makes it a preferred choice for complex cases,reducing the need for conversions.