Simulating Activity‐based Costing

Abstract

Many traditional cost accounting methods can result in distorted cost information as they allocate overheads in proportion to labour. This can result in a low technology product being overcosted and a high technology product being undercosted. Activity‐based costing (ABC) allocates costs more accurately and pinpoints areas of waste. Describes software which provides a tutorial introduction to ABC and highlights the difference between ABC and conventional cost accounting by means of simulating a production environment for the user to explore. The simulator should foster improved understanding of the opportunities of ABC.

Citation

Helberg, C., Galletly, J.E. and Bicheno, J.R. (1994), "Simulating Activity‐based Costing", Industrial Management & Data Systems, Vol. 94 No. 9, pp. 3-8. https://doi.org/10.1108/02635579410072126