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Integrating activity‐based costing with simulation and data mining

H. Kostakis (Department of Business Administration, University of Patras, Patras, Greece)
C. Sarigiannidis (Department of Accounting, Technological Educational Institute of Patras, Patras, Greece)
B. Boutsinas (Department of Business Administration, University of Patras, Patras, Greece Artificial Intelligence Research Center, University of Patras, Patras, Greece)
K. Varvakis (Department of Business Administration, University of the Aegean, Mytilene, Greece)
V. Tampakas (Department of Accounting, Technological Educational Institute of Patras, Patras, Greece)

International Journal of Accounting & Information Management

ISSN: 1834-7649

Article publication date: 27 June 2008

Abstract

Purpose

This paper aims to present a methodology for activity‐based costing, which combines simulation modeling and association rule mining, one of the core data‐mining techniques. The objective of the proposed methodology is to deal with the problem of defining cost drivers.

Design/methodology/approach

Activity‐based costing uses the output produced by the simulation of cost drivers as inputs. As opposed to the integration of the ABC technique with simulation modeling, the possibility of estimating an empirical distribution of the simulated cost drivers does not exist in the proposed methodology. This is achieved with the use of data‐mining techniques and is based on the proposition that, if an association is found between a cost driver, whose estimation or calculation is time‐consuming, and another cost driver, which can easily be estimated or calculated, then the latter can lead to the estimation or calculation of the former.

Findings

The extracted association rules correspond to existing dependencies between the cost drivers.

Originality/value

The paper presents a combined methodology to deal with the problem of defining cost drivers in activity‐based costing. An example of the proposed methodology in healthcare is also presented.

Keywords

Citation

Kostakis, H., Sarigiannidis, C., Boutsinas, B., Varvakis, K. and Tampakas, V. (2008), "Integrating activity‐based costing with simulation and data mining", International Journal of Accounting & Information Management, Vol. 16 No. 1, pp. 25-35. https://doi.org/10.1108/18347640810887744

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited