Implementing ABC IMA Article

Implementing Activity Based Costing

By: Gary Cokins


There is a growing desire among organizations to understand their costs and the behavior of factors that drive these costs. Yet there is confusion over how to go about understanding costs and how to distinguish competing cost measurement methodologies (e.g., activity-based costing, standard costing, throughput accounting, project accounting, target costing, etc.). The result is that managers and employees are confused by mixed messages about which costs are the correct ones. Upon closer inspection, the various costing methodologies do not necessarily compete: they can coexist, be reconciled, and blended.

This article, published by the Institute of Management Accountants (IMA) 2006. provides an overview of how Activity Based Costing is an effective tool to assist management organizations to obtain critical cost information that is accurate and relevant to improve their competitiveness.



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