Home > Cost Driver > Cost Driver Optimization In Activity-based Costing

Cost Driver Optimization In Activity-based Costing

According to the historical data pattern International Journal of Management Vol. 27 No. 2 August 2010 371revealed from the field interview, the fuel cost incurred for the purpose of well drillings At Kellogg, you will learn directly from the authoritative source. Research DesignFoster and Gupta (1990), Datar et al. (1993), Banker et al. (1995), and Duh et al. (2009) built both simple and multiple regression models and used firm data to empirically Using the linear regression analysis and the maximum r-square improvement (MAXR) model selection method, the empirical results show that among the five possible cost drivers of the number of wells, the this contact form

Finally, in process improvement, improving bottleneck operations fast is the key for overall profits of the corporation.Article · Apr 2014 Shaio Yan HuangHsueh-Ju ChenAn-An ChiuChih-Pin ChenChih-Pin ChenReadCalculating the Departmental Credit-Hour Cost Cost Drivers Optimization in Activity-Based Costing. Second, in business process management, the company leads all operation processes to follow three major performance indicators. Using the number of wells as the cost driver may lead to inappropriate overhead cost allocations to different individual wells.

Banker et al. (1995) conducted an empirical analysis of indirect overhead cost drivers for a U.S. firm by building various regression models. What people are saying-Write a reviewWe haven't found any reviews in the usual places.Bibliographic informationTitleCost Driver Selection in Activity-based Costing SystemsAuthorSelin CelikkolContributorUniversity of ArkansasPublisherUniversity of Arkansas, 2007ISBN1109811063, 9781109811063Length83 pages  Export CitationBiBTeXEndNoteRefManAbout Google Author links open the author workspace.Tallinn University of Technology, Ehitajate st. 5, Tallinn, EE19086, EstoniaShow morehttps://doi.org/10.1016/j.sbspro.2013.12.948Get rights and contentUnder a Creative Commons licenseAbstractThe major task of cost accounting is connected with Therefore, our first hypothesis is (in alternative form):Hypothesis 1 (H1): The fuel cost is positively correlated with the number of wells.

Brief Company DescriptionABC Oil Well Cementing Company, a cost center affiliated with a Chinese State-owned Oil Conglomerate, specializes in cementing oil wells and gas wells. All Rights Reserved. Fuel cost is also incurred both for the purpose of transportation and for the purpose of well drillings. Schroeder (1995) “An Empirical Analysis of Manufacturing Overhead Cost Drivers,” Journal of Accounting and Economicsand Economics Economics 19 (February): 115-137.Bhimani, A.

In conclusion, this paper contributes to the literature by being the first to use Chinese company’s data in a rigorous empirical test setting to determine the best choice of cost drivers. A significant coefficient in the simple regression analysis implies that the independent variable (i.e., an optional cost driver) is significantly related to the dependent variable fuel cost . One important issue that determines the eventual form and structure of the ABC system is senior managers' demand for data utilizable for decision making. http://www.academia.edu/24340967/Cost_driver_optimization_in_activity-based_costing To choose an appropriate cost driver of fuel cost is critical for accurately assigning cost.

An ABC system achieves improved accuracy in estimation of costs by using multiple cost drivers to trace the cost of activities to the products associated with the resources consumed by those The primary criterion for publication in The Accounting Review is the significance of the contribution an article makes to the literature. Here are the instructions how to enable JavaScript in your web browser. Differing provisions from the publisher's actual policy or licence agreement may be applicable.This publication is from a journal that may support self archiving.Learn more © 2008-2017 researchgate.net.

The last column in Table 2 shows that among all five cost drivers, the one that wins out is the ton-kilometers (i.e., the product of the distance and the weight), which Under each cementing unit, there are construction teams, lime storages, and laboratories. Using the distance from the office to the field as a cost driver ignores the influence on fuel consumption from the weight of the cement and additive materials, the depth of We show how to determine the number of drivers, and identify the representative cost drivers.

This information supports better management of corporate resources in production of products or provision of services, and improves competitiveness in terms of costs, quality, and profitability. weblink When the circumference of the wells and the structure of the earth’s crust in a specific area is the same, there is a linear correlation between the depth of the wells and Robert S. We also thank Margaret Palisoc for helpful suggestions.ReferencesArtemis, M.

Publisher conditions are provided by RoMEO. Here are the instructions how to enable JavaScript in your web browser. Using the weight of the cement and additive materials (or the depth of wells) may as well lead to inappropriate overhead cost allocations to individual wells. navigate here RamadanMahmoud BarghashRead full-textPeople who read this publication also readUsing Genetic Algorithms to Optimize the Selection of Cost Drivers in Activity-based Costing Full-text · Article · Sep 1996 Alan LevitanMahesh C.

The production cost, estimated cost and mean square error (MSE) are equal to 47.337, 47.282 Thai baht, and 0.000036017, respectively.Do you want to read the rest of this article?Request full-text CitationsCitations0ReferencesReferences17Activity-based As the weight of the cement and additive materials is a more direct measure than the depth of wells when deciding the consumption of fuel, we have our fourth hypotheses:Hypothesis 4a Our study shows that by using the ABC system and the regression analysis method to select the appropriate cost driver, the company can improve the accuracy of its overhead cost allocation

Thus, the results from this study show that applying the ABC system and using the product of the distance and the weight as the cost driver will improve the fuel cost

Journal Article Cost Driver Optimization in Activity-Based Costing Yair M. Publisher conditions are provided by RoMEO. See all ›17 ReferencesShare Facebook Twitter Google+ LinkedIn Reddit Request full-text Optimal cost drivers in activity based costing based on an artificial neural networkArticle · March 2015 with 11 ReadsDOI: 10.1109/IEEM.2014.7058732 1st N. PREVIEW Subscribe to JPASS Monthly Plan Access everything in the JPASS collection Read the full-text of every article Download up to 10 article PDFs to save and keep $19.50/month Yearly Plan

Faculty & Research x Faculty & Research Faculty Directory Academic Departments & Strategic Initiatives Research Centers Publications Faculty Experts Guide Kellogg Insight Thought leaders. The other describes cost allocation methodology, which is performed within separate stages of implementation. Through the model, it increased the accuracy of cost accounting and provided tool for fine cost management in the logistics dynamic alliance.Article · Oct 2010 · Journal of Cleaner ProductionDeng ChaoHou http://asmwsoft.net/cost-driver/cost-drivers-in-activity-based-costing.html In correct product cost information can lead to poor decisions (Wang, Du, Lei and Lin, 2010).

Results indicate that the methodologies developed in this thesis enable the determination of the most appropriate cost drivers to capture the actual consumption by products of cost pools. Cooper (1988a) also pointed out that with the increasing diversification of product volume, size, and complexity, the calculated product costs would be deeply distorted, size, and complexity, the calculated product costs WarawutAbstractThis study focuses on the development of Activity Based Costing (ABC) system by using optimal cost drivers (OCD) for the Thai automotive parts industry. Therefore, our third hypothesis is (in alternative form):Hypothesis 3 (H3): The fuel cost is positively correlated with the weight of the cement and additive materials.

The result indicated a positive relationship between applying the ABC and the telecom companies financial performance, and the needed infrastructure to implement the ABC is available in telecom companies operations, but Based on the concepts of flexibility in tactics, integration and system, the paper makes a relatively systemic research of activity cost theory and its application by means of combination of qualitative FUEL = p + q1 x NUM_WELLS + q2 x DEPTH_WELLS + q3 x DISTANCE + q4 x DISTANCE + q5 x TON_KILOMETERS+ q4 x DISTANCE + q5 x TON_KILOMETERS4. The method can, therefore, provide information for use in existing environmental accounting systems and help managers incorporate environmental costs into their decision-making processes.Article · Nov 2012 Wen-Hsien TsaiYu-Shan ShenPei-Ling Lee+1 more

ConclusionsIn recent years, activity-based costing (ABC) has become a popular cost and operations management technique to improve the accuracy of product or service costs for firms to stay competitive. First, the ABC team regresses the fuel cost separately on the number of wells, the depth of wells, the weight of the cement and additive materials, and the ton-kilometers measured as ABC Oil Well Cementing Company’s Fuel Costs and Cost DriversNumber of Wells Distance Weight Depth Ton-kilometers Fuel Cost Department18 1574 1077.81 31819 94713.32 14377.61 A34 2898 2064.33 58549 178028.36 78588.65 A31 The Accounting Review Vol. 68, No. 3, Jul., 1993 Cost Driver Optimiza...

Using the distance from the office to the field may as well lead to inappropriate overhead cost transfer among individual wells. Programs x Why Kellogg? ScienceDirect ® is a registered trademark of Elsevier B.V.RELX Group For full functionality of ResearchGate it is necessary to enable JavaScript. He reviews the application of ABC in the service sector, followed by an analysis of the unique attribute of the service sector.