A note on optimal cost driver selection in ABC

Homburg, Carsten

doi:10.1006/mare.2000.0150

Cited by 63 publications

(40 citation statements)

References 6 publications

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“…There are no clear norms for selecting the cost driver, e.g. it can be a lead time of a product as in time-driven ABC (Kaplan and Anderson 2004) or even a combination of several independent factors in the activity (Homburg 2001). An illustrative presentation of implementing ABC in a company is presented in Figure 2.…”

Section: Activity-based Costingmentioning

confidence: 99%

Activity-based costing method in forest industry – modelling the production and costs of sawing, the pulp and paper industry, and energy production

Korpunen¹

2015

Diss. For.

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3 Korpunen, H. 2015. Activity-based costing method in forest industry -modelling the production and costs of sawing, the pulp and paper industry, and energy production. Dissertationes Forestales 203. 47 p. http://dx.doi.org/10.14214/df.203 ABSTRACTAnnual commercial roundwood removal in Finland has reached approximately 50 million m 3 , delivering almost 1.6 billion Euros of stumpage earnings to forest owners. The aim of this dissertation is to study and model the production costs of saw-, pulp and paper mills and the combined heat and power (CHP) plant, which are the branches of forest industry that create most of the industry's wood-paying capability. The modelling was performed by implementing the activity-based costing (ABC) method for virtual greenfield mills located in Finland.Firstly, according to the principles of ABC, mill productions were divided into processes. The sawmills consisted of eight processes, while the pulp and paper mills of ten each and the CHP plant consisted of four processes. Secondly, all required production resources of each process were defined and quantified. Thirdly, the costs of each process caused by using the wood processing or energy use resources were allocated to the products or raw materials with cost drivers.Results of the example calculations indicated that the cost structures of the studied mills shared some similarities: wood, pulp or paper drying was a relatively expensive process. The share of drying was 40%, 39% and 18% of the annual costs in the sawmill, pulp mill and paper mill, respectively. The fluidized bed boiler represented 47% of the total costs of the CHP plant. Taking into consideration the practical limitations of the test calculations, the profitability of the pulp and paper mills and CHP plant were on a healthy level. The sawmilling case was left out of the profit calculations due to lack of market price information. According to the results, ABC was well-suited to the demands of forest industry. The models provide useful tools for cost-based decision-making for both forestry specialists and the forest industry. The results indicate that the sawing pattern is a very important cost factor in sawmilling, while energy production was crucial for the pulp and paper industry and the utilization rate was in a key position for CHP. From the forest industry viewpoint the models directly aid in performance analyses; results of the calculations revealed that the relatively high share of drying costs in the industry signals that the most cost-effective improvements could be found from energy savings, which has been the tendency in past years. These results can be combined with the forest end of the supply chain, whereby forest engineers have access to better control over tree-bucking optimization and different parallel value chains of forestry can be compared and evaluated with high accuracy.

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Section: Activity-based Costingmentioning

confidence: 99%

Activity-based costing method in forest industry – modelling the production and costs of sawing, the pulp and paper industry, and energy production

Korpunen¹

2015

Diss. For.

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“…According to the statistics of Japan, the maintenance costs increase so dramatically in the 20th year, so the calculation of operating costs is limited to within 20 years, the purchase price of a ordinary steel car, a stainless steel car and a aluminum alloy car is 5.16 million yuan, 6.12 million yuan and 9.29 million yuan respectively [7], by 4% residual value ratio, the average annual depreciation cost is 248,000 yuan, 297,500 yuan and 446.500 yuan respectively.…”

Section: H Vehicle Basic Depreciation Costsmentioning

confidence: 99%

A New Method to Calculate the Cost of Urban Rail Transit Operation

Yang¹,

Yuan²,

Chen³

et al. 2015

Proceedings of the International Conference on Chemical, Material and Food Engineering

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Abstract-For urban rail transit enterprises, estimation and forecast of operating costs is important reference basis to keep runinng well, and it is also an effective means to maintain the sustainable development. In this article, firstly, a framework of calculating the urban rail transit operating costs will be formed, and on this basis, the calculation method is put forward, which is called operating expenditure cost method, Based on this method, the operating costs of Shanghai rail transit line 1 are worked out, the calculation results are highly close to the actual operating costs, it is proved that the operating expenditure cost method is reliable and efficient and can be well used to predict the urban rail transit operating costs.

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“…With a few exceptions (Babad and Balachandran 1993;Homburg 2001), prior research has not investigated the effect of the cost of data collection on system design. While we do not explicitly model the cost of updating information, we can indirectly examine the impact of updating costs by identifying the amount of information needed in each costing system.…”

Section: The Information Required By Each Systemmentioning

confidence: 99%