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Article
Publication date: 11 July 2016

Rossano Linassi, Anete Alberton and Sidnei Vieira Marinho

This paper aims to examine whether using menu engineering (ME) together with activity-based costing (ABC) for menu analysis provides new insights into true menu…

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4781

Abstract

Purpose

This paper aims to examine whether using menu engineering (ME) together with activity-based costing (ABC) for menu analysis provides new insights into true menu profitability. The traditional ME approach only uses food costs to determine the contribution margin (CM) of individual menu items. This combined approach uses both food and traceable operating costs to estimate CMs more accurately.

Design/methodology/approach

An improved ME model was developed and tested in an oriental restaurant in Brazil. Direct observation of restaurant activities allowed most costs to be traced (not simply allocated) to individual menu items.

Findings

The results revealed small differences in the rankings between the traditional approach and ABC/ME, demonstrating that the integration of ABC with ME made it to possible to identify increased food-costs and lower CMs for all groups of menu items. The results also show that ABC methods are applicable to an oriental-style restaurant.

Research limitations/implications

Just one restaurant and only 80 per cent of the menu were examined in this study. Future research should apply the model used here to other restaurant types located in different geographical areas to validate the approach.

Practical implications

The results suggest that ME can be improved upon by first assessing variable costs using ABC methods.

Originality/value

This paper combines two different analytic techniques (ME and ABC) into a new approach that reveals the true picture of profit and loss for a menu from a restaurant in Brazil.

Details

International Journal of Contemporary Hospitality Management, vol. 28 no. 7
Type: Research Article
ISSN: 0959-6119

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Book part
Publication date: 1 January 2014

Kip R. Krumwiede and Shannon L. Charles

To empirically test for an impact on profit performance when activity-based costing (ABC) is used in companies with customer service and low-price strategies. We also…

Abstract

Purpose

To empirically test for an impact on profit performance when activity-based costing (ABC) is used in companies with customer service and low-price strategies. We also investigate whether the profit impact of ABC usage is affected by higher-quality information systems.

Methodology/approach

Survey.

Findings

We find a positive impact on profit performance when ABC is used by companies with customer service as a strategic priority but not when ABC is used by companies with lower emphasis on customer service. For companies emphasizing low-price strategies, we find a positive impact on profit performance, especially when ABC is used together with high-quality information systems.

Research limitations/implications

This study develops a method of measuring strategic priorities of a firm. It divides firms into strategy groups based on their degree of emphasis on three strategic priorities: low price, flexibility, and customer service.

Practical implications

Identifies certain contexts when ABC is especially beneficial.

Originality/value of paper

If the use of ABC information leads to better strategic and operational decisions, firm performance should improve. However, prior research on the impact of ABC on firm performance has found little to no connection and usually only when it is used with other practices. This is the first study to find an impact on profit performance for firms with customer service and low-price strategies and high-quality information systems.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78350-632-3

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Article
Publication date: 5 October 2010

Paige Vaughn, Carola Raab and Kathleen B. Nelson

The paper aims to examine the activity‐based costing (ABC) method as a feasible and appropriate tool for the casino and hotel industry to apply to support kitchens in…

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3045

Abstract

Purpose

The paper aims to examine the activity‐based costing (ABC) method as a feasible and appropriate tool for the casino and hotel industry to apply to support kitchens in order to eliminate the monthly allocation of overhead based on variable costs.

Design/methodology/approach

Data were collected at a support kitchen in a Las Vegas casino. These data were analyzed by using ABC methods and establishing ABC costs. ABC methods were compared to traditional allocation methods to determine, first, if allocations could be eliminated entirely; and, secondly, to establish if some outlets would be significantly impacted by the accounting change.

Findings

An ABC approach can be applied to support kitchens and total cost (ABC) can be estimated. This approach allowed the casino to eliminate traditional allocation methods based solely on food cost.

Research limitations/implications

ABC was shown to be a powerful technique that can be applied effectively in a support kitchen of a casino. Since this paper involved only a single support kitchen in a single casino, further research should be conducted to confirm that ABC can also be applied in support kitchens in other hospitality industry settings.

Practical implications

The use of ABC techniques confirmed that the ABC process is a useful tool in an effort to abolish allocations and can be applied to the remaining support kitchens. Without the benefit of this paper, restaurant management for individual food and beverage outlets received an unfair share of the overhead and did not have appropriate cost information for bread products.

Originality/value

ABC may be a powerful technique when applied effectively to the food and beverage operations in the field of hospitality.

Details

International Journal of Contemporary Hospitality Management, vol. 22 no. 7
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 9 July 2018

Irem Otay, Embiye Senturk and Ferhan Çebi

The purpose of this paper is to propose a new integrated method for evaluating inventory of slow-moving items by introducing the application of fuzzy AHP method with…

Abstract

Purpose

The purpose of this paper is to propose a new integrated method for evaluating inventory of slow-moving items by introducing the application of fuzzy AHP method with interval Type-2 fuzzy sets (IT2FSs) and ABC analysis.

Design/methodology/approach

In the study, fuzzy analytic hierarchy process (AHP) method with IT2FSs is employed to set the importance of criteria. The weights obtained from IT2 fuzzy AHP are used to classify slow-moving items in ABC analysis. In the application part, a real-life case study is presented.

Findings

The result of this study indicates that an integrated approach utilizing IT2 fuzzy AHP and ABC analysis can be used as a supportive tool for classification of slow-moving items. The problem is solved under fuzzy environment to handle uncertainties and lack of information about slow-moving items.

Practical implications

Actual data are provided from an automotive company for prioritizing a various criteria to evaluate and classify stocks and a hypothetical model integrated with IT2 fuzzy AHP and ABC analysis is demonstrated.

Originality/value

Apart from inventory classification literature, the study integrates fuzzy AHP method by employing interval IT2FSs and ABC analysis to solve the real-life inventory classification problem.

Details

Journal of Enterprise Information Management, vol. 31 no. 4
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 2 March 2012

Amel Ben Hadj Salem‐Mhamdia and Bahia Bejar Ghadhab

The purpose of this study is to show how using value management (VM) together with activity based costing (ABC) for menu analysis helps managers to estimate contribution…

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4174

Abstract

Purpose

The purpose of this study is to show how using value management (VM) together with activity based costing (ABC) for menu analysis helps managers to estimate contribution margins more precisely and to analyze customer satisfaction. This new approach is considered an appropriate tool for guiding and directing the process of making decisions.

Design/methodology/approach

In this research a case study is employed to examine whether the application of the ABC/VM approach can improve the decision‐making process in a Tunisian à la carte restaurant. Data were collected over the period of a month using direct observations of restaurant activities to calculate profitability, and a questionnaire was administered to determine customer satisfaction.

Findings

The results show that six of 11 menu items were profitable. The results also show that managers should analyze profitability and customer point of view simultaneously in order to inform the decision‐making process.

Research limitations/implications

Only a single à la carte‐style restaurant and the dinner menu was examined in this study. Future research should apply the model to other restaurant types in order to validate the model.

Practical implications

The paper suggests that using activity based costing with value management can enhance the quality of the decision‐making process. It demonstrates to managers how they can reduce their costs and improve resource allocation, taking into consideration customer needs and satisfaction.

Originality/value

The paper combines two analytic techniques (VM and ABC) that reveal a menu's true profit and loss picture and a menu item's value.

Details

International Journal of Contemporary Hospitality Management, vol. 24 no. 2
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 27 September 2021

Riccardo Giannetti, Lino Cinquini, Paola Miolo Vitali and Falconer Mitchell

The purpose of this paper is to investigate how a substantial organization gradually builds a management accounting system from scratch, changing its accounting routines…

Abstract

Purpose

The purpose of this paper is to investigate how a substantial organization gradually builds a management accounting system from scratch, changing its accounting routines by learning processes. The paper uses the experiential learning theory and the concept of learning style to investigate the learning process during management accounting change. The study aims to expand the domain of management accounting change theory to emphasize the learning-related aspects that can constitute it.

Design/methodology/approach

The paper provides an interpretation of management accounting change based on the model of problem management proposed by Kolb (1983) and the theory of experiential learning (Kolb, 1976, 1984). The study is based on a 14-year longitudinal case study (1994‐2007). The case examined can be considered a theory illustration case. Data were obtained from a broad variety of sources including interviews, document analysis and adopting an interventionist approach during the redesign of the costing system.

Findings

The paper contributes to two important aspects of management accounting change. First, it becomes apparent that the costing information change was not a discrete event but a process of experience and learning conducted through several iterations of trial-and-error loops that extended over the years. Second, the findings reveal that the learning process can alter management accounting system design in a radical or incremental way according to the learning style of the people involved in the process of change.

Research limitations/implications

Because of the adopted research approach, results could be extended only to other organizations presenting similar characteristics. Several further areas of research are suggested by the findings of this paper. In particular, it would be of interest to investigate the links between learning styles and communication and its effect on management accounting change.

Practical implications

The paper includes implications for the management of learning during management accounting change, to improve the efficiency and effectiveness of this process.

Originality/value

This paper is one response to the call for an interdisciplinary research approach to the management accounting change phenomena using a “method theory” taken from the discipline of management to provide an explanation of the change in management accounting. In respect of the previous literature, it provides two main contributions, namely, the proposal of a model useful both to interpret and manage learning processes; the effect of learning style on management accounting routines change.

Details

Qualitative Research in Accounting & Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1176-6093

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Article
Publication date: 21 September 2015

Ataur Belal and David L Owen

The purpose of this paper is to examine the underlying drivers for the development and subsequent discontinuation of stand-alone corporate social responsibility (CSR…

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1799

Abstract

Purpose

The purpose of this paper is to examine the underlying drivers for the development and subsequent discontinuation of stand-alone corporate social responsibility (CSR) reporting in a multinational subsidiary in Bangladesh.

Design/methodology/approach

The research approach employed for this purpose is a case study using evidence from a series of in-depth interviews conducted during the period 2002-2010. Interview data are supplemented by examining other sources of information including annual reports, stand-alone social reports and relevant newspaper articles during the study period.

Findings

It appears that the stand-alone CSR reporting process was initiated to give the subsidiary a formal space in which to legitimise its activities in Bangladesh where both tobacco control regulation and a strong anti-tobacco movement were gaining momentum. At the start of the process in 2002 corporate interviewees were very receptive of this initiative and strongly believed that it would not be a one off exercise. However, in the face of subsequent significant national policy shifts concerning tobacco control, irreconcilable stakeholder demands and increasing criticism of the CSR activities of the organisation at home and abroad the process was brought to an abrupt end in 2009.

Research limitations/implications

The paper has a number of implications for policy makers concerning the future prospects for stand-alone social/sustainability reporting as a means of enhancing organisational transparency and accountability. In addition the paper discusses a number of theoretical implications for the development of legitimacy theory.

Originality/value

Using the lens of legitimacy the paper theorises the circumstances leading to the initiation and subsequent cessation of CSR reporting in the organisation concerned. As far as the authors know this is the first study which theorises and provides significant fieldwork-based empirical evidence regarding the discontinuation of stand-alone social reporting by a multinational company operating in a developing country. Thus, it extends previous desk-based attempts at using legitimacy theory to explain a decrease (or discontinuity) in CSR disclosures by de Villiers and van Staden (2006) and Tilling and Tilt (2010).

Details

Accounting, Auditing & Accountability Journal, vol. 28 no. 7
Type: Research Article
ISSN: 0951-3574

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Book part
Publication date: 6 May 2003

Robert C Kee

Theeuwes and Adriaansen (1994), among others, have asserted that activity-based costing (ABC) is inappropriate for operational decision-making. In this article, ABC is…

Abstract

Theeuwes and Adriaansen (1994), among others, have asserted that activity-based costing (ABC) is inappropriate for operational decision-making. In this article, ABC is modified to reflect separate flexible and committed cost driver rates for an activity. This enables the model to reflect the difference in the behavior of an activity’s flexible and committed costs needed for operational planning decisions. The modified ABC facilitates determining the resources required to produce the product mix developed from the firm’s strategic plan and the excess capacity that will result. The modifications made to ABC aid in determining an optimal product mix when the firm has excess capacity, while the traditional ABC may not. Equally important, it facilitates measuring the financial implications of the resource allocation decisions that comprise the firm’s operational plan. As the operational plan is implemented, operational control is used to ensure that it is performed in an efficient and effective manner. The modified ABC enables the firm’s managers to compute the different types of deviations that arise from using flexible and committed resources at the unit, batch, and product levels of the firm’s operations. This aids in understanding problematic aspects of the firm’s operations and identifying where management resources are needed to improve operational efficiency.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-84950-207-8

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Article
Publication date: 4 September 2020

Benjamin Chukudi Oji and Sunday Ayoola Oke

There is growing evidence of a knowledge gap in the association of maintenance with production activities in bottling plants. Indeed, insights into how to jointly optimise…

Abstract

Purpose

There is growing evidence of a knowledge gap in the association of maintenance with production activities in bottling plants. Indeed, insights into how to jointly optimise these activities are not clear. In this paper, two optimisation models, Taguchi schemes and response surface methodology are proposed.

Design/methodology/approach

Borrowing from the “hard” total quality management elements in optimisation and prioritisation literature, two new models were developed based on factor, level and orthogonal array selection, signal-to-noise ratio, analysis of variance and optimal parametric settings as Taguchi–ABC and Taguchi–Pareto. An additional model of response surface methodology was created with analysis on regression, main effects, residual plots and surface plots.

Findings

The Taguchi S/N ratio table ranked planned maintenance as the highest. The Taguchi–Pareto shows the optimal parametric setting as A4B4C1 (28 h of production, 30.56 shifts and 37 h of planned maintenance). Taguchi ABC reveals that the planned maintenance and number of shifts will influence the outcome of production greatly. The surface regression table reveals that the production hours worked decrease at a value of planned maintenance with a decrease in the number of shifts.

Originality/value

This is the first time that joint optimisation for bottling plant will be approached using Taguchi–ABC and Taguchi–Pareto. It is also the first time that response surface will be applied to optimise a unique platform of the bottling process plant.

Details

The TQM Journal, vol. 33 no. 2
Type: Research Article
ISSN: 1754-2731

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Article
Publication date: 1 November 1998

Wen‐Hsien Tsai

The purpose of this paper is to present an integrated cost of quality ‐ activity‐based costing (COQ‐ABC) framework for measuring quality costs under ABC. The main…

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14002

Abstract

The purpose of this paper is to present an integrated cost of quality ‐ activity‐based costing (COQ‐ABC) framework for measuring quality costs under ABC. The main deficiencies of most COQ systems are: (1) no consensus method to allocate overhead costs to COQ elements, (2) the failure to trace quality costs to their sources, and (3) the lack of information about how indirect workers spend their time on various activities. These deficiencies can be easily overcome under ABC together with work sampling. The cost and nonfinancial information achieved from the integrated COQ‐ABC system can be used to identify the magnitude of the quality improvement opportunities, to identify where the quality improvement opportunities exist, and to continuously plan the quality improvement programs and control quality costs. The ultimate goal of the integrated COQ‐ABC system will be to continuously improve processes/activities/quality so that no defects at all are produced and quality cost measurement ultimately becomes unnecessary.

Details

International Journal of Quality & Reliability Management, vol. 15 no. 7
Type: Research Article
ISSN: 0265-671X

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