Print Page

Activity-based management for the labor

intensive manufacturer: a field study
By Sparr, Roger
Publication: Journal of Managerial Issues
Date: Wednesday, June 22 1994

Many journal articles have documented the applicability of Activity based Costing (ABC) in a
technologically advanced manufacturing environment (Cooper, 1990, 1988a, 1988b, 1989a, 1989b;
Drumheller, 1993; Greenwood and Reeve, 1992; King, 1991; Kaplan, 1990; Merz and Harvy, 1993;
Roth and Borthick, 1991; Smith and Leksan, 1991; Turney, 1991; Turney and Anderson, 1989).
Research has shown that automation, computer-integrated manufacturing, and robotics have
increased overhead support costs that often are unrelated to allocation bases such as direct labor
hours and dollars. Authors such as Cooper and Kaplan (1988) and Turney (1989) illustrated how
the traditional method of assigning overhead based on direct labor may result in inaccuracies
when direct labor represents a small fraction of the total manufacturing cost. However, Garrison
states that direct labor may be an adequate basis for allocation when:
1. Direct labor is a significant element of
total product cost,
2. The amount of direct labor input and
the amount of machine input do not
differ greatly between products,
3. Products do not differ greatly in terms
of volume ,or individual lot size, and
4. A high statistical correlation can be established
between direct labor and the
incurrence of overhead costs (that is, direct
labor acts as a cost driver for overhead)
(1991: 90).
This paper addresses the issue of whether an activity-based cost system can produce cost
estimates which differ from those produced by the standard cost system (which is driven by direct
labor) in a labor intensive manufacturing environment. In the manufacturing firm considered in this
study, approximately 79% of conversion cost is labor related. For example, during a typical month,
conversion costs of this manufacturing firm total $7.1 million, and its labor related costs total $5.6
million. Therefore, labor is a very significant portion of the total manufacturing cost, unlike many
high technology firms whose labor component can be as little as 5% of total production cost
(Kaplan, 1988). Alternatively, direct labor as a function of total production costs typically, averages
50% at the research site.
Specifically, the research study was undertaken at the assembly department in one plant of a
major international manufacturer, "TPG Plastics." The name of the company has been modified to
preserve confidentiality. The industry is labor intensive, highly competitive, and operates in an
environment of extremely narrow profit margins.
The benefits of the application of ABC principles in an advanced manufacturing environment have
been well documented; however, to date, the potential benefits of such a system in a labor
intensive environment have received little attention in the literature. Accordingly, the purpose of the
study is:
1) to examine the manufacturing system of a labor intensive process to determine if an activity-
based cost system provides incremental benefits above those of the standard cost system based
on direct labor hours,
2) to document various managerial implications resulting from insights gained from the study, and
3) to add to the body of literature that describes real-world manufacturing processes for the
purpose of understanding the implications for cost system design.
The circumstances at the plant site in which this study was undertaken are consistent with
Garrison's items 1 and 4 cited above, but inconsistent with items 2 and 3. The direct labor
component is a significant Portion of the total cost (item 1). However, volume diversity (item 3)
exists across the product line. Prior to the study, management assumed that a correlation exists
between direct labor and the incurrence of overhead (item 4), such that products with greater
complexity require more labor and support resources to manufacture (item 2). Management
reasoned that by using direct labor as a cost driver, complex products that require more time to
produce would appropriately absorb greater levels of overhead as compared to products that are
less complex. While management's logic appears reasonable, other factors also impact the
overhead cost of producing the company's product line. These factors may play a key role in
designing the cost system, as well as in implementing activity-based management (ABM).
The topic of ABM has developed from the stream of research in activity-based costing (Lamond,
1992; Raffish and Turney, 1991; Turney, 1991). ABM includes product and manufacturing process
knowledge obtained from an ABC study to facilitate strategic and operating decisions such as
determining product mix, setting product selling prices, routing products through the plant, and
matching parts to low-cost processes. ABM seeks to provide information about resources required
to carry out production, as well as identify actions to improve firm performance.
This study, which considers the types of activities as well as management implications of improved
cost system design, suggests that a labor intensive manufacturer can benefit from an ABC/ABM
system. The study finds that even in a labor intensive environment, ABC makes product costs
appear more consistent with the products' overhead support requirements. The findings suggest
that ABC may be useful for a wide range of manufacturing environments, beyond the highly
automated ones for which it was originally conceived.
Overview of Operations and Problems with the Existing Cost System at TPG
TPG, a major firm in the plastics industry, molds plastic components to very precise tolerances and
assembles the components into a product line consisting of ten distinct products within five grades:
GRADE PRODUCT

1) Regular grade (REG, REG+)

2) Special grade (SP1, SP2)
3) Premium grade (PREM1, PREM2,
PREM+)
4) Large grade (LARGE)
5) Low grade (LOW1, LOW2)
The management of TPG plastics became concerned that its cost accounting system did not
accurately reflect the costs of production across its diverse product line. In addition to large
differences in quality and complexity among the product groups, TPG experiences great disparities
in the production volume. As indicated in Table 1, TPG uses five machine types to manufacture
the product line. The volume of each product is shown by machine type. The great diversity in
production volume is underscored by the number of regular grade products which far exceeds that
of the premium and low grades.
Table 1
Production Volume by Machine Class

Product Machine Machine Machine Machine Machine Total

1 2a 2b 2c 3

REG 43,496 169,879 23 56,161 269,559

REG+ 117,430 69,506 22,155 209,091
SP1 1,771 10,747 12,518
SP2 20,887 16,647 37,534
PREM1 3,000 5,516 15,723 24,239
PREM2 9,406 5,388 14,794
PREM+ 3,459 6,218 9,677
LARGE 100,683 100,683
LOW1 15,696 15,696
LOW2 9,709 9,709
185,272 352,474 18,916 121,433 25,405 703,500
Management previously reasoned that the accounting system accurately captured the costs of
complexity in the plant's labor intensive environment. Because the application of overhead Is
based on direct labor hours, of Which premium grade products require more than low grade, the
premium grade units receive a larger portion of the overhead cost. Unfortunately, upon examining
the process, management discovered that many overhead costs are invariant to changes in the
volume of production and levels of labor, which called into question the relevancy of the company's
cost system.
Management became concerned that the low volume premium grade products were not allocated
a sufficient amount of overhead cost, while the high volume regular grade products were allocated
too much overhead cost. Management perceived that thee batch-related costs of machine setups
should be allocated among the units produced with each setup; that is, the setup cost per unit
should vary inversely with the production batch size.
The managers also believed other cost distortions occurred under the existing cost allocation
system attributable to diverse product specifications. For example, extra resources are committed
to the premium grade products to ensure a higher standard of quality. The assembly of premium
grade products requires a greater number of unique components that must be handled and
transported, thereby resulting in the incurrence of additional overhead costs.
The Manufacturing Process
Manufacturing processes generally can be classified into one of two broad types, continuous or
discrete part (Reeve, 1991). Continuous processes are characterized by a uniform flow of
homogeneous material. Examples include the manufacture of paper, rubber, and cereal products.
Alternatively, discrete part manufacturing is characterized by the production and assembly of many
unique parts; automobile, computer, and heavy equipment manufacturing are examples. TPG
plastics incorporates both types of manufacturing systems, continuous and discrete, to produce
the final product. Preparation and extrusion of the raw material represent a continuous process,
while component assembly represents a discrete process. The type of manufacturing process
dictates the nature of resource consumption and directly influences the design characteristics of a
management information system.
As shown in Figure I, a raw material compound is mixed and transferred to one of three highly
automated, extrusion machines that produce components of varying sizes, shapes, and gauges.
Components are transported from each of the three extruding machines into the assembly area
and delivered to an operator at an assembly machine. Each product contains between five and
seven components with four common components across all product lines. The 81 assembly
machines, each with an operator, may be classified into one of five machine types. Each type of
machine h set for a particular range of capabilities consistent with the requirement of the product.
As a result, each machine can produce only a limited number of products.
[ILLUSTRATION OMITTED]
After assembly, the products are transported sequentially to the painting department, the heat
treatment department, and the trimming department Testing and inspection after the assembly
process may reveal that a defective product has been manufactured. Defective units are
transported to the repair area for corrective action, while those units meeting engineering
standards are transferred to the finished goods area.
Determination of Coat Pools and Cost Drivers
As previously stated, TPG plastics uses five classes of machinery in the assembly department.
Machine class 1 contains a new generation of equipment that is more automated and more
capable of holding tighter tolerances than those produced by the company's older equipment. The
new machinery is designed to enhance both quality and volume of output. Machine classes 2a, 2b,
and 2c are less sophisticated than machine class 1 and represent different upgrades of the same
basic assembly method. Upgrades were for modifications of the equipment to accommodate
advanced technologies used to assemble Premium and Special grades. Higher levels of
sophistication are reflected by the machine class designation a, b, or c. Machine class 3
assembles products using a very different (and older) method than that of the other machine
classes.
For purposes of the ABC study, the management of TPG decided to accumulate costs in seven
cost pools. Five cost pools relate to the machine class, while the remaining two cost pools contain
machine setup and polyfilm costs. Polyfilm is an indirect material that is applied to certain product
groups during assembly to prevent the various components from prematurely adhering to one
another. The machine class and number of machines within each class are as follows:
Machine Class 1 -- 24 machines
Machine Class 2a -- 36 machines
Machine Class 2b -- 11 machines
Machine Class 2c -- 7 machines
Machine Class 3 -- 3 machines
The cost components chosen for the ABC study were selected based on process information
provided by knowledgeable operations personnel. The company identified the types of overhead
costs that appeared unrelated to the allocation base of direct labor hours. The processes identified
by the study that generate overhead costs are as follows:
Trucking. The cost associated with the trucking activity results from moving plastic components
from the extruding machines to the assembly machines. This activity is accomplished by placing
the finished components onto a moveable storage rack and using motorized vehicles to deliver the
components to the assigned assembly machine. After a storage rack is emptied of all components
at the assembly machine, the storage rack is picked up by a trucker and delivered back to the
extruding machine. Nine different components are transported to the assembly machines for use in
production, while assembled products are moved to a painting area. All components used to
assemble a completed unit are trucked in this manner. As a result, the trucking requirements differ
among the product groups. While all groups share some common components, certain products
require additional unique components. The traditional cost system used by the company allocated
trucking costs to products without regard for the requirements of individual products.
Mechanical Delay. Certain products require very precise assembly machine alignment. When a
machine is statistically determined to be out of alignment, the machine is shut down until it can be
realigned to conform to tolerances. The traditional accounting system records and allocates the
expense associated with unproductive labor during mechanical delays across all products based
on direct labor cost. While the assembly workers are paid according to a piece rate system, the
cost of downtime labor is paid at 95 percent of a standard rate per hour.
Alternatively, the first stage allocation in the ABC system distributes the total delay costs to the
cost pools (machine classes) by the relative percentage of delay hours. Since products that are
similar in design are produced on the same machine, management assumes that downtime for
delays occurs consistently across all product groups produced by each machine type.
Training Cost. Training costs, which are built into the product standard costs, occur continuously
as a result of personnel turnover. Additionally, prior to the period of the ABC study, new assembly
machines were installed in the department. These machines require operator training before the
operator can attain normal pay standards. All wages paid to the operators while undertaking
machine training are recorded as training expense. Training an employee on a new piece of
equipment can take up to 20 days before achieving the desired level of production.
The traditional cost system allocates the total amount of training expense across all product types
using a fixed percentage of standard direct labor cost. Because of operating complexities, certain
machine groups may experience more operator turnover, thereby causing higher Overhead costs.
The ABC study allocates the cost of training to the machine groups that generate the training cost.
Machine setup. Table 2 illustrates the number of setups by product class and also illustrates the
methodology employed to attach the setup costs to products. Assembly machines are designed to
handle a wide range of different sizes and styles of product. During a month, an assembly machine
will make an average of five product changes. The number of product changes can range from a
low of zero to a high of 25. When production schedules require a setup, the assembly machine
operator is idle. Idle time is recorded in the payroll system as pan of the setup cost.
Table 2
Setup Cost by Product

Product Number of Cost per Total

Setups Setup(1) Costs

REG 106 68.03 $7,212

REG+ 43 68.03 2,926
SP1 23 68.03 1,564
SP2 16 68.03 1,089
PREM1 14 68.03 952
PREM2 44 68.03 2,994
PREM+ 7 68.03 476
LARGE 49 68.03 3,334
LOW1 11 68.03 748
LOW2 2 68.03 136

315 $21,432
(1) Total setup cost = $21,432/
Total setups = 315 = $68.03 = Cost per setup
The traditional accounting system allocates the total amount of setup delay across all product
types using a fixed percentage of standard direct labor cost. Products assembled in large batch
sizes should enjoy economies of scale because the fixed cost of a setup is allocated over a large
number of units. Since much variation exists in number of setups required for each product type,
the setup expense is thought to be misallocated. The ABC approach to allocating this cost is
illustrated in Table 2.
Polyfilm. Table 3 illustrates the number of units requiring polyfilm, and the product allocations
based on a cost per unit. Construction specifications on certain products require the use of a
polyfilm material to protect the surface of components during the assembly process. The polyfilm is
applied to the component during assembly and discarded after the assembly is completed. While
only certain product types require the use of polyfilm to protect components, the current cost
system allocates the cost of polyfilm to all product types. Alternatively, the ABC system attaches
the cost exclusively to units whose specifications require the polyfilm.
Table 3
Polyfilm Costs by Product

Product Units Cost/Unit(1) Polyfilm

Requiring Costs
Polyfilm

REG -- 0.223 --
REG+ 28,434 0.223 $6,346
SP1 -- 0.223 --
SP2 -- 0.223 --
PREM1 24,239 0.223 5,409
PREM2 14,794 0.223 3,301
PREM+ 9,677 0.223 2,159
LARGE -- 0.223 --
LOW1 -- 0.223 --
LOW2 -- 0.223 --
0.223
77,144 $17,215

(1) Total polyfilm cost = $17,215/

Total Units requiring Polyfilm = 77,144 = .233 = cost per unit
Figure II illustrates the two. rage allocation procedure used in the ABC study to attach overhead
costs to units of production. The costs of trucking, mechanical delay, and training are allocated to
the five cost pools defined by machine class. Allocations are based on the proportion of trucking
services, mechanical delays, and training hours required to service machines 1, 2a, 2b, 2c, and 3.
Second stage allocations from the cost pools to the products are based on the proportion of each
product type that is manufactured within the cost center.
[ILLUSTRATION OMITTED]
The two remaining cost centers accumulate the costs of machine setup and polyfilm. Machine
setup costs are attached to products using the number of setups as a cost driver, while polyfilm
costs are attached based upon the amount of Polyfilm required for assembly.
Results of the Study
The following points were revealed as a result of the ABC study:
1) The LOW1 and LOW2 products assembled on Machine 3 have distinctively different trucking
needs. The low-end products have higher trucking costs per unit relative to all other products
except the premium grades. See Table 4 for trucking cost information as well as production
volume in units.
Table 4
Assembly Department Overhead Costs
ABC versus Standard Cost
 Product

Cost Element REG REG+ SP1 SP2 PREM1

Department
Costs(1) $642,460 $541,860 $34,766 $137,436 $86,691

Activity-related
Trucking 54,951 54,265 3,056 10,023 9,419
Mechanical Delay 6,301 5,091 418 773 1,121
Setups 7,212 2,926 1,564 1,089 952
Training 2,786 7,504 0 1,340 0
Benefits 29,384 29,704 1,764 5,318 5,304
Polyfilm 0 6,346 0 0 5,409
Total $743,094 $647,696 $41,568 $155,979 $108,896

Production Units 272,341 209,996 14,807 35,094 22,443

Overhead Cost:
ABC Cost/Unit 2.729(2) $3.084 $2.807 $4.445 $4.852
STD Cost/Unit $2.849 $3.079 $2.840 $4.434 $4.407

Percent Change
in Overhead
Cost/unit -4.2 .2 -1.2 .2 10.1

Product

Cost Element PREM2 PREM+ LARGE LOW1 LOW2

Department
Costs(1) $79,658 $117,658 $314,278 $18,003 $8,527

Activity-related
Trucking 8,458 8,246 25,281 6,784 4,197
Mechanical Delay 1,037 1,005 2,592 1,065 660
Setups 2,994 476 3,334 748 136
Training 0 0 225 0 0
Benefits 4,830 4,758 12,914 3,402 2,104
Polyfilm 3,301 3,159 0 0 0
Total 100,278 $134,302 $358,624 $30,002 $15,624

Production Units 13,555 11,476 101,569 15,120 7,899

Overhead Cost:
ABC Cost/Unit 7.398(2) $11.703 $3.531 $1.984 $1.978
STD Cost/Unit $6.429 $11.019 $3.609 $1.634 $1.517

Percent Change
in Overhead
Cost/Unit 15.1 6.2 -2.2 21.4 30.4

(1) Costs include Benefits, Other Supplies, Scrap, and Process Waste

(2) The authors do not believe these cost figures (or any cost figures)
are accurate to three decimal places, but present them this way for
computational purposes.
2) Mechanical delay hours per machine were identical for Machine Class 2a, Machine Class 2b,
and Machine Class 2c. The newer machines, Machine Class 1, had five fewer delay hours per
machine. Machine Class 3 experienced an excessive number of delay hours, where each machine
had 30 more delay hours than machines in other classes. These machines, which are exclusively
used to produce low grade products, are older than the other machines used by the company.
3) Machine Class 2b, which produces mostly premium grade products, experienced approximately
twice the number of setups as the average of all other machine classes.
4) Engineering specifications required the use of polyfilm in only four products.
Table 4 summarizes the manufacturing overhead costs by product as determined by the ABC
study and contrasts these costs with those of the traditional standard cost system. Two general
classifications of overhead costs exist: Standard department costs and the Activity-related costs
discussed in this paper. The most important findings involve the percentage change in costs for
the premium grades and the low grades. Both appear much more costly to produce than
suggested by the existing cost system.
Figure III illustrates the percentage change in overhead cost per unit calculated in Table 4. The
labor-based overhead allocation procedure dearly does not capture the costs of complexity
associated with the production of the low and premium grades. Conversely, the ABC system
reports much lower overhead cost associated with the high volume regular grade. Cross-subsidies
in product costs exist in the traditional system as reflected in both positive and negative change
percentages in Figure III.
[GRAPH OMITTED]
The low grade products are more costly to produce than the traditional cost system suggests
because they consume a disproportionately large amount of overhead costs relative to the other
product grades. When overhead costs related to trucking and mechanical delay are attached to the
low grade products, the narrow profit margin associated with these products becomes negative.
Additionally, interviews with management reveal that the ABC costs of the premium grades are
intuitively consistent with the complexities associated with these high quality, high performance
products.
Managerial Implications
Activity-Based Management
Figure IV, which is based on a chart developed by Norm Raffish and Peter Turney for the CAM-1
Glossary of Activity-based Management (ABM), illustrates the interrelationships between activity-
based costing concepts and operational performance measures (Turney, 1992). For example, the
cost assignment view identifies resources, which are traced to activities and ultimately assigned to
cost objects. The TPG Plastics study identified resources consumed in the activities of trucking,
mechanical delays, training, setups and polyfilm assembly. These resources ultimately were traced
to the appropriate cost object, which in this case is a product. However, ABM considers not only a
cost assignment view, but also a process view. For example, having identified cost drivers(1) that
are associated with key activities, performance measures relating to these activities may be
constructed. In the spirit of continuous process improvement, activities and their associated cost
drivers are evaluated to discover opportunities for waste elimination and overhead reduction,
thereby encouraging better processes and lower manufacturing costs. As depicted in Figure IV,
the activity-based cost system is revised when significant refinements to the process are realized.
Additionally, process knowledge obtained from the ABC study may promote innovative
performance measures and process improvement; thus, the ABC and ABM systems are
interrelated.
[ILLUSTRATION OMITTED]
Management Alternatives and Implications
In TPG, a complexity study undertaken by management served as a basis for selecting ABC cost
drivers and designing a system that better represents the production process. The existing
standard cost accounting system did not consider complexity, and therefore provided inadequate
information about resource consumption by product family.
As shown in Figure III, LOW1 and LOW2 products were found to require more overhead than
previously captured by the cost system. As demonstrated in the analysis, these products have a
different physical flow and require more resources, such as trucking demands and mechanical
delays, than the other products in the line. However, to eliminate the product without replacing it
with another would result in lost revenues in excess of direct costs. As a result of information
gained from the ABC complexity study, management considered several options as follows:
Option 1. Raise the price on a test basis to determine if the market was sufficiently strong to
support a price increase.
Potential Benefits. The results of the complexity study enabled the company to better understand
the resource consumption of each stock keeping unit (SKU) in the product line. By selectively
raising the prices on LOW grade products, the company may improve the SKU's profitability and
return on investment. The LOW grade products have experienced a decline in demand, which has
led many manufacturers to abandon production. A price increase may be effective since supply
may be declining at a faster rate than demand.
Potential Liabilities. A price increase could have an immediate, negative impact on the sales
volume of LOW grade products. Fast action would be required to contain costs in the event of
negative market reaction to a price increase.
Option 2. Reevaluate the production process for improvement opportunities suggested by the
study.
Potential Benefits. Capital investment in the process could make the physical flow of LOW
products consistent with that of all other units across the product line, thereby reducing trucking
costs. Additionally, equipment upgrades would significantly reduce the cost of mechanical delay
associated with the aging equipment used to manufacture the LOW grade products.
Potential Liabilities. Market analyses suggest that products LOW1 and LOW2 are in a declining
market; therefore, long-term investment is not considered advisable. Option 3. Replace lost
production from LOW1 and LOW2 with other products in line.
Potential Benefits. Industry projections suggest a growing market for the Premium grade products.
The company has invested in processes that will enable it to manufacture these grades in a cost
effective manner.
Potential Liabilities. Problems associated with the ability to immediately replace lost volume with
other products include a manufacturing environment in North America which is in a position of
over-capacity.
Actual Management Decision and Outcome
Strategic implications that evolved from the complexity study encouraged management to route all
production for the LOW1 and LOW2 products into one North American plant. Consistent with the
objectives of ABM, the company attempted to match specific product lines with the company's low
cost producer. All other plants would replace lost volume by expanding the output of the remaining
products. Management faced the issue of monitoring and balancing the capacity of an industry,
while at the same time considering product mix.
After one and one-half years of operation, the plant producing exclusively LOW1 and LOW2
products was closed because the company made the strategic decision to eliminate the products
from the line. Cost considerations as well as declining market conditions influenced the decision.
Concerns include the company's inability to offer a complete line to dealers; the loss of dealers,
sales, and market share were considered as possible consequences. Alternatively, demand for
premium grades is strong and growing. The company decided to exchange the complexity of
LOW1 and LOW2 with a greater level of complexity when the PREM+ grade was chosen as a
replacement. In the short run, lost revenues are expected to exceed cost savings; however, the
new product mix offers both higher margins and greater long-run growth potential. Management's
decision to close the plant producing exclusively LOW1 and LOW2 products also contributed to
balancing the quantities demanded and supplied in North America.
Summary find Conclusions
Management believes the two-stage allocation process illustrated in this study produced cost
estimates that reflect the manufacturing process better than the standard cost system which used
direct labor hours to allocate overhead costs. Recognizing one of the fundamental tenets of ABC,
complexity causes costs, TPG Plastics undertook a study to identify complex processes that were
driven by product demands. Acting upon the colt drivers discovered, two products were associated
with high complexity costs. One manufacturing facility in North America was identified as the low
cost producer of the two products; therefore, all production was routed to that plant. In doing so,
process flow among all remaining manufacturing plants was made more efficient.
At a later time, additional factors became relevant to the company which motivated management
to discontinue the product line. In making the decision to re-route and finally discontinue
production, complexity costs related to overhead, nonfinancial process-related information and
market-related information were considered by management. Thus, the interrelationship between
ABC and ABM is illustrated by the actions taken by management.
The cost analysis performed by TPG suggests that even in a labor intensive manufacturing
environment, ABC can produce cost estimates that differ and are superior to those provided by a
labor-driven overhead rate. As shown in this study, the assumption that complexity costs are
captured as a function of labor hours is an oversimplification that ignores the issue of volume-
related and nonvolume-related overhead costs. Multiple allocation bases can more accurately
capture these nonvolume-related complexity costs. The implications of this study are that other
companies in a variety of circumstances may also find ABC beneficial.
(1) Cost drivers are factors that cause a change in the cost of an activity (Raffish and Turney,
1991).
References
Cooper, R. 1990. "Cost Classification in Unit-Based and Activity-Based Manufacturing Cost
Systems." Journal of Cost Management (Fall): 4-14.
--. 1988a. "The Rise of Activity-Based Costing--Part One: What Is an Activity-Based Cost
System?" Journal of Cost Management (Summer): 45-54.
--. 1988b. "The Rise of Activity-Based Costing--Part Two: When Do I Need an Activity-Based Cost
System?" Journal of Cost Management (Fall): 41-48.
--. 1989a. "The Rise of Activity-Based Costing--Part Three: How Many Cost Drivers Do You Need,
and How Do You Select Them?" Journal of Cost
Management (Winter): 34-46.
--. 1989b. "The Rise of Activity-Based Costing--Part Four: What Do Activity-Based Cost Systems
Look Like? Journal of Cost Management (Spring): 45-54.
--, and R. S. Kaplan. 1088. "Measure Costs Right: Make the Right Decisions." Harvard Business
Review (September-October): 96-103.
Drumheller, Harold K. 1903. "Making Activity-Based Costing Practical." Journal of Cost
Management (Summer): 21-27.
Garrison, Ray H. 1991. Managerial Accounting Sixth Edition. Homewood: Irwin.
Greenwood, T., and J. Reeve. 1992. "Activity-Based Cost Management for Continuous
Improvement: A Process Design Framework." Journal of Cost Management (Winter): 22-40.
Kaplan, R. 1990. Limitations of Cost Accounting in Advanced Manufacturing Environment:
Measures for Manufacturing Excellence. Boston: Harvard Business School Press.
--. 1988. "One Cost System Isn't Enough." Harvard Business Review (January-February): 61-66.
King, A. 1901. "The Current Status of Activity-Based Costing: An Interview with Robin Cooper and
Robert S. Kaplan." Management Accounting (September): 22-26.
Lamond, S. 1992. "Activity-Based Management: An Australian Perspective." Journal of Cost
Management (Summer): 42-46.
Merz, C. Mike, and A. Harry. 1993. "ABC Puts Accountants on Design Team at HP." Management
Accounting (September): 22-27.
Raffish, N., and P. Turney. 1991. "Glossary of Activity-Based Management." Journal of Cost
Management (Fall): 53-63.
Reeve, J. M. 1991. "Cost Management in Continuous-Process Environments." Journal of Cost
Management (Spring): 22-34.
Roth, H. P., and F. Borthick. 1991. "Are You Distorting Costs By Violating ABC Assumptions?"
Management Accounting (November): 39-42.
Smith, K, and J. M. Leksan. 1991. "A Manufacturing Case Study on Activity-Based Costing."
Journal of Cost Management (Summer): 45-54.
Turney, P.B.B. 1992. "Activity-Based Management." Management Accounting (January): 20-25.
--. 1991. "How Activity-Based Costing Helps Reduce Cost." Journal of Cost Management (Winter):
29-35.
--. 1989. "Using Activity-Based Costing to Achieve Manufacturing Excellence." Journal of Cost
Management (Summer): 23-31.
--, and B. Anderson. 1989. "Accounting for Continuous Improvement." Sloan Management Review
(Winter): 37-47.
Thomas L. Albright Assistant Professor of Accounting The University of Alabama
Roger Sparr Controller Uniroyal Goodrich Tire Company
© Copyright 2010 The Gale Group, Inc. All rights reserved.
© Copyright © 1994 Pittsburg State University - Department of Economics

You may not repost, republish, reproduce, package and/or redistribute the content of this page, in
whole or in part, without the written permission of the copyright holder.
Close Window
Copyright © 1999 - 2009 AllBusiness.com, Inc. All rights reserved.
Use of this site is governed by our Terms of Use Agreement and Privacy Policy.Copyright © 1994 Pittsburg State University -
Department of Economics© Journal of Managerial Issues 2010© Copyright 2009 The Gale Group, Inc. All rights reserved.
You may not repost, republish, reproduce, package and/or redistribute the content of this page,
in whole or in part, without the written permission of the copyright holder.