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Activity-based Costing (ABC) and Activity-based Management(ABM)Implementation – Is This the Solution for Organizations to Gain Profitability?

Author

Listed:
  • Ildikó Réka CARDOS

    (University, Faculty of Economics and Business Administration, Cluj-Napoca)

  • Stefan PETE

    (Babes-Bolyai University, Faculty of Economics and Business Administration, Cluj-Napoca)

Abstract

Adherents of ABC/ABM systems claimed traditional management accounting systems generated misleading costs in a contemporary, tumultuous, often changing business environment and implementing ABC/ABM would remedy this. That is why activity-based costing (ABC) and activity-based management (ABM) represents the symbol of improved competitiveness and efficiency in every organization.The purpose of this article – after analyzing the existing literature in the field – is to emphasize that new cost systems such as ABC and ABM could be a strong couple that assures competitiveness and efficiency for each company. Another objective is to present that, besides its disadvantages, firms implement the ABC/ABM system because it permits better tracing of costs to objects, superior allocation of overheads to cost objects, financial and non-financial analysis and measures useful to managers and management accountants in the decision-making process.

Suggested Citation

  • Ildikó Réka CARDOS & Stefan PETE, 2011. "Activity-based Costing (ABC) and Activity-based Management(ABM)Implementation – Is This the Solution for Organizations to Gain Profitability?," Romanian Journal of Economics, Institute of National Economy, vol. 32(1(41)), pages 151-168, June.
    • Handle: RePEc:ine:journl:v:1:y:2011:i:41:p:151-168
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    References listed on IDEAS

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    1. Kevin Baird, 2007. "Adoption of activity management practices in public sector organizations," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 47(4), pages 551-569, December.
    2. Trond Bjørnenak & Falconer Mitchell, 2002. "The development of activity-based costing journal literature, 1987-2000," European Accounting Review, Taylor & Francis Journals, vol. 11(3), pages 481-508.
    3. Trevor Hopper & Maria Major, 2007. "Extending Institutional Analysis through Theoretical Triangulation: Regulation and Activity-Based Costing in Portuguese Telecommunications," European Accounting Review, Taylor & Francis Journals, vol. 16(1), pages 59-97.
    4. Marko Jarvenpaa, 2007. "Making Business Partners: A Case Study on how Management Accounting Culture was Changed," European Accounting Review, Taylor & Francis Journals, vol. 16(1), pages 99-142.
    5. Lukka, Kari & Granlund, Markus, 2002. "The fragmented communication structure within the accounting academia: the case of activity-based costing research genres," Accounting, Organizations and Society, Elsevier, vol. 27(1-2), pages 165-190.
    6. Kari Lukka & Jan Mouritsen, 2002. "Homogeneity or heterogeneity of research in management accounting?," European Accounting Review, Taylor & Francis Journals, vol. 11(4), pages 805-811.
    7. Pierre-Laurent Bescos & Éric Cauvin & Maurice Gosselin, 2002. "Activity-based costing and activity-based management : A comparison of the practices in Canada and in France," ACCRA, Association francophone de comptabilité, vol. 8(3), pages 229-244.
    8. Colwyn Jones, T. & Dugdale, David, 2002. "The ABC bandwagon and the juggernaut of modernity," Accounting, Organizations and Society, Elsevier, vol. 27(1-2), pages 121-163.
    9. Zimmerman, Jerold L., 2001. "Conjectures regarding empirical managerial accounting research," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 411-427, December.
    10. Pierre-Laurent Bescos & Éric Cauvin & Maurice Gosselin, 2002. "Activity-based costing and activity-based management : A comparison of the practices in Canada and in France," Comptabilité - Contrôle - Audit, Association francophone de comptabilité, vol. 8(3), pages 229-244.
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    Cited by:

    1. HATIF Majeed & SADIK Hamza, 2012. "Strategic Management Accounting Techniques In Romanian Companies: An Empirical Study," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 7(2), pages 126-140, August.
    2. Phillip C. James, 2013. "An Analysis of the Factors Influencing the Adoption of Activity Based Costing (ABC) in the Financial Sector in Jamaica," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(7), pages 8-18, July.
    3. Phillip C. James, 2013. "An Analysis of the Factors Influencing the Adoption of Activity Based Costing (ABC) in the Financial Sector in Jamaica," International Journal of Business and Social Research, LAR Center Press, vol. 3(7), pages 8-18, July.

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    More about this item

    Keywords

    ABC; ABM; implementation process; profitability;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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