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Why Is “Integrated” ABC Better?
Author(s) -
Keys David E.,
LeFevre Robert J.
Publication year - 2002
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.10052
Subject(s) - activity based costing , product (mathematics) , service (business) , computer science , process management , operations research , management science , operations management , business , marketing , engineering , mathematics , geometry
Traditionally, the various parts of an organization have been assumed to be independent. This was done mainly tosimplify calculations, though the assumption is almost always inaccurate in reality. But computer technology nowmakes it possible to account for the many interrelationships of activities. The explicit consideration of theseinterrelationships in product and service costing can be referred to as integrated activity‐based costing. Bymeasuring these interrelationships, managers can better understand the parts of an organization, how they relatewith each other, and how they can be integrated into the entire organization. © 2002 Wiley Periodicals,Inc.