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Measuring Customer Profitability With Activity-Based Costing And Balanced Scorecard


  • Ildikó Réka Cardos

    (BabeÈ™-Bolyai University Romania)

  • Vasile Daniel Cardos

    (BabeÈ™-Bolyai University Romania)


In the last years many organizations realized that each customer is different; marketorientation is essential to their success and the secret to improve profitability is to measure andmanage customer profitability. Identifying and separating the most profitable customers from the lessprofitable ones; reducing the erosion of profit by customers; focusing on long-term customerprofitability are only a few of those objectives that provides routes to a clear strategy for profitablegrowth. Although customer profitability analysis is considered to be a marketing topic it is consideredas an important managerial accounting innovation in the same time and represents attractiveresearch topic because of its novelty and exploding growth. Having in mind these aspects theremainder of this paper is structured as follows: first the background of managerial accounting isestablished by presenting the four evolution stages of managerial accounting. We would like to pointout that the new challenge of managerial accounting is customer orientation and customerprofitability analysis. Second, based on the existing literature in the field, we focus on the conceptualframework of customer profitability analysis. Third, we focus on the managerial accounting toolsassociated with customer profitability analysis. We would like to emphasize that combining customerprofitability analysis with an activity-based costing system and balanced scorecard organizationscan measure customer profitability accurately, gaining valuable information that enables companiesto transform unprofitable relationships into profitable ones. Finally, conclusions are drawn in orderto establish future research objectives.

Suggested Citation

  • Ildikó Réka Cardos & Vasile Daniel Cardos, 2014. "Measuring Customer Profitability With Activity-Based Costing And Balanced Scorecard," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(16), pages 1-5.
  • Handle: RePEc:alu:journl:v:1:y:2014:i:16:p:5

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    managerial accounting; customer profitability; balanced scorecard;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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