implementing abc: an australian feasibility study

SHANE DIKOLLI AND MALCOLM SMITH

IMPLEMENTING ABC: AN AUSTRALIAN FEASIBILITY

STUDY

he benefits of activity-based costing (ABC) have been supported by many authors since T the seminal works of Cooper (1988), Kaplan

(1988), and Johnson (1988). Recent work has cited advantages in several different industries (Troxel and Weber, 1990), and from both manufacturing and non- manufacturing sectors (see Innes and Mitchell 1991). However, the literature is not unanimously support- ive of ABC implementations and Cooper et al (1992) and Armitage and Atkinson (1990), among others, show evidence of resistance to attempts to change productcosting systems.

This article offers reasons why firms might oppose ABC implementations and uses evidence from a case study in Australia to examine how ABC cost-benefits can be improved. In such an analysis many of the benefits seem too difficult to quantify and the costs too large for ABC to be considered seriously, so that many firms might be discouraged from pursuing activity-based systems.

A number of reasons can be put forward to explain the cause of unfavourable cost-benefit outcomes and these fall into the following categories:

deficient technical support; problematic data collection; uncertain model definitions; and misconceptions of methodology. The first part of this paper uses the existing litera-

ture to analyse the problems to be faced in an implementation, and the second part uses evidence gath- ered in an Australian field study to suggest ways in which the cost-benefit of ABC might be improved.

DEFICIENT TECHNICAL SUPPORT

For an ABC implementation to have a positive impact, the employees must demonstrate their commitment to the project and have a basic understanding of the methodology involved. A successful implementation also demands a project leader who understands the

Activity-based costing systems have been one of the most important innovations in accounting practice in recent years, yet we know little about the practical dificulties associated with the design and implementation of such systems. This study examines the objections put forward in the management accounting literature, which suggest that costs outweigh benefits in ABC imp 1 em en ta t io ns. The arguments are developed in the context of an Australian feasibility study. Encouraging lessons from the study suggest that a systematic approach to the implementation of ABC will yield significant benefits.

AUSTRALIAN ACCOUNTING REVIEW VOL. 6 NO. 2 1996 45

objectives and mechanics of the ABC methodology. Unless expert technical support' is sought, the project may prove to be too difficult for management to attempt, particularly as employees are unlikely to have had the benefit of past experience of ABC implementation to guide them.

Acquiring expertise by way of consultants may be both cost-efficient and time-efficient. However, the employment of consultants does not necessarily produce a better system. The firm's employees must have some input into the implementation so that they will know how to extract decision-useful activity- based information long after the consultants have left.

PROBLEMATIC DATA COLLECTION

The data-collection process of an activity-based cost- 'ing implementation requires strategies for the collection of information about three key resources of a firm - labour, occupancy, and machinery. An interview process and reference to asset schedules are required in seeking answers to a number of funda- mental questions about resources:

What activities are employees engaged in? What resources do they consume? Where are resources being consumed? For what reason? What role(s) does any machinery perform? What resources does this machinery consume?

Innes and Mitchell (1992) describe four approaches to collecting data for the activity-based model two interview-based approaches, an approach requiring senior staff to supply information on behalf of employees, and a timesheet/diary-based approach. They note one failed ABC implementation at least partly attributable to a failed interview approach, caused by negative reactions during interviews of staff who viewed the project as a first step to cost-cut- ting and job losses.

Lack of precision in the interviewing process because of the following can also cause problems:

key employees may not recall accurately the percentage of their time allocated to each activity;

a large percentage of employees may feel threatened and conspire not to supply truthful information;

employees whose normal duties are interrupted by the interview may not concentrate properly on the questions being asked; and

46 AUSTRALIAN ACCOUNTING REVIEW

a work replacement during the time of the interview may not be readily available. Such difficulties are common in interview studies

(see Kahn and Cannelll957, Yu and Cooper 1983). In a UK study Bailey (1991) finds data extraction to

be a significant practical problem. Difficulties arise because much of the source data required for resource and activity drivers has not previously been captured. Such data might include the number of customer complaints, invoices processed, distance travelled by sales representatives, and items repacked. The time needed to establish procedures to capture the driver data might seem excessive and firms will rarely have staff with both the time and the requisite knowledge to conduct employee interviews.

Data collection in some firms is also hindered by restrictions in infrastructure. Computerised accounting systems, for example, might not be able to interface with spreadsheets or ABC software.

UNCERTAIN MODEL DEFINITIONS

Although this issue may not seem important before considering implementation, it is a practical matter that becomes critical as the activity-based model is built. A lack of guidance in the literature contributes to the ambiguity of definitions of activities in ABC models. While Cooper (1989) and Innes and Mitchell (1992) offer some useful generic advice, practical grass-roots issues have not been raised in the activity-based costing literature.

In practice, firms frequently employ multi-tasking, flexibly-skilled individuals who can perform a number of roles. This can complicate activity definitions since employees then find it almost impossible to trace amounts of time consistently to any particular task on a weekly basis. The decision to define a group of transactions or tasks as an activity raises a number of issues such as:

the level at which a group of transactions or tasks should be defined as an activity; the appropriateness of grouping activities together; the extent to which the ultimate cost object (product or customer) might influence the type of activity defined; and the means of distinguishing a non-value-added task from direct labour activity. These issues also raise the question of consistency

in the model. The logic in the decision to establish one group of transactions as an activity needs to be applied equally to all decisions to avoid undermining the usefulness of the activity-based model. Innes and Mitchell (1991) find the definition, selection and availability of activities and drivers to be key procedural problems in the design of ABC systems, problems which apply equally to both resource and activity drivers.

MISCONCEPTIONS OF METHODOLOGY

Pryor (1992) suggests that activity-based management (ABM) suffers from three key misconceptions: the expected level of product costing accuracy, the level of difficulty of ABC and the applicability of ABM to non-manufacturing environments. Similarly, misconceptions about the ABC methodology could deter firms from implementing ABC, particularly if the financial management of the firm is narrowly based and suffers from a lack of exposure to alternative points of view.

Anecdotal evidence suggests that Australian companies are unwilling to adopt ABC because of common misconceptions. Common reasons for claims that they do not need ABC include:

“It would yield limited benefits since our

“It isn’t that different from what we already do.” ‘We don’t have enough products for ABC to make a difference.” While each of these assertions may be true in

particular contexts, they should not be considered automatic criteria for dismissing the potential benefits of an ABC system. The assertions may be made by those who do not properly understand the mechanics of the method.

processes are already tightly controlled.”

FINDINGS FROM A CASE STUDY

A case study was conducted between September 1992 and January 1994 to suggest ways of improving the cost-benefit analysis employed in assessing the usefulness of ABC for product costing. A manufacturing company was targeted which was willing to co-oper- ate in an ABC feasibility study (Phase 1) and, if successful, a subsequent implementation (Phase 2).

The chosen company, “Homemade Small Goods Pty Ltd”2 is a small food-processing firm employing about 200 people, manufacturing 170 types of finished stock? and generating annual revenues of the order of $20 million. The company is a market leader.

Homemade agreed to cooperate in the project with the objective of improving the firm’s product costing system. The first, four-month phase of the project was devoted to an examination of the feasibility of an ABC system at Homemade; the second phase comprised a detailed 11-month exploration of activities in order to generate revised product costs.

The existing system at Homemade relied largely on overhead allocations based on labour measures, which, given the labour-intensive nature of the firm, was arguably appropriate. In such an environment, there would potentially be little difference between direct labour-based and activity-based overhead allocations. The observation of significant benefits from the use of activity-based costing in such a labour- intensive environment would provide strong evi-

dence for the general applicability of ABC methods, and made this company a particularly suitable target.

The project team agreed to focus the initial feasibility study on six key products selected from the three core product limes. Each product reflects different characteristics and consumes varying rates of resources:

two high-volume products, standard items in the largest core line, each with a different target market; two high-volume products, standard items in each of the smaller core lines; and two low-volume, non-standard items. Plant tours during the early stages of the study

revealed that Homemade’s operations were structured around traditional function lines. The input/process/output manufacturing function was supported by packing, selling, distribution, adminis- tration, engineering, and quality-control sub-systems. These are shown in Figure 1 to illustrate the position of activities subsequently identified.

Figure 2 illustrates Homemade’s existing cost system and the effect of adopting activity-based costing. The ABC system, with 68 different activity cost pools, appears intimidating but the allocation task was made less onerous through:

limiting consideration to just six key products in the feasibility study phase; using ABC software (EasyABC) in the implementation phase; and the existence of common resource and activity drivers in each phase. Figure 3 shows the process adopted in both the

feasibility and implementation phases. The feasibility study provided an excellent framework for implementing ABC; however, it was necessary to review all actions taken at this stage in order to evaluate their effect on resource and activity drivers for cost tracing when the number of products under consideration was expanded from six to 170 in the implementation phase.

The foregoing analysis suggests that potential improvements in Homemade’s ABC cost-benefit analysis might be provided by:

reducing technical support needs; reducing data collection; applying definition decision rules; and alleviating misconceptions.

model detailed in Figure 3. Each of these is considered in the context of the

REDUCTION OF TECHNICAL SUPPORT NEEDS

A DIY approach Companies can overcome the problem of costly technical support by adopting a do-it-yourself (DIY) approach. In such a situation the consultant’s role might be limited to expert advice. In Homemade a

AUSTRALIAN ACCOUNTING REVIEW 47

FIGURE 1: AN OVERVIEW OF KEY OPERATIONS AT HOMEMADE

Inspect ingredients Develop products Inspect product

Facility sustaining

Financial reporting Cleaning

Procurement

Order ingredients Order packaging Store ingredients

+

+

Process product

Store cooled product

Packing I Pack product Store product

Code & recode stock

Assemble loads Load trucks

Deliver stock

Repair machines Maintain machines

Sell product Travelling

Customers


FIGURE 2: COMPARISON OF HOMEMADE’S COSTING SYSTEMS

Classification of overhead costs in the general

ledger

EXISTING SYSTEM

COST POOL Production labour % direct production

overhead , labour cost

Packing labour % direct packing overhead labour cost b

Production overhead

% direct production . labour cost

Units . produced Variable selling & distribution

Fixed selling & distribution

ACTIVITY-BASED SYSTEM

Resource Activrty cost ActivkY driver poo l# l driver b

Overhead costs allocated from Resource Activity cost , ActiVrty general ledger w pool #2 driver

Resource Activity cost . Activity classifications drlver pool #3 driver b

~

Resource

7 i E 7 - + b

Product costs

Product costs


FIGURE 3: THE ABC IMPLEMENTATION PROCESS AT HOMEMADE

Interviews .T Data

extraction

w Dictionary of activities

w Selection of resource &

activity drivers

Calculation of t product costs

temporary employee was used to assist with the time- consuming data collection task. Technical “how-to” advice was obtained from a number of sources, including the extensive AI3C literature.

The obvious benefit of a DJY approach is that the model development is well understood and “owned” by potential future users of the model. Such internal ownership is critical for motivating continuing maintenance and improvement of the activity-based information.

Activity dictionary In the early stages of Phase 1 an attempt was made to classify all activities on a hierarchical basis, as unit- related, batch-related, product-sustaining and facility- sustaining. However, this process was largely self- defeating because it generated considerable conflict over what comprised a “correct” classification, and was abandoned as a major distraction. The isolation of facility-sustaining expenses, like those of Figure 1, was later reintroduced (through a facility-sustaining rate per unit) to account for expenses which had to be treated separately but could not logically be allocated to any particular product. This allocation was clearly visible in the documentation so that it could be


ignored if not thought relevant for decision-making purposes.

In Homemade the interviewing process yields a long list of activities. This list is initiated during the interviewing process and constantly updated during the feasibility study. Developing the list of activities is a critical phase of the feasibility study and the process is made easier with the use of an activity dictionary, consisting of a list of the activity descriptions and associated activity definitions. The dictionary is main- tained in a database format for the purposes of easy manipulation and sorting. The database can be sort- ed either alphabetically or in a predefined order resembling the chronological order of production in the factory, depending on the objective of using the dictionary. The activity dictionary yields a number of benefits:

If there is uncertainty about whether certain cross-functional tasks have been included in a particular activity, then the activity definition will provide decisive answers, which ultimately save time and effort. Cross-functional costs are normally assigned to activities based on the percentage of time spent on each activity. It provides a verifiable, consistent framework for compiling the interview notes. It provides initial insight into what activities are being performed adequately and draws attention immediately to activities that cause inefficiencies, such as “code and recode stock”. It provides immediate guidance at the beginning of a visit or appointment to the concluding point of the previous visit.

REDUCTION OF DATA COLLECTION

Following Innes and Mitchell (1992), the data-collection approach in Homemade is primarily interview- based, which is consistent with the largest expenditure categories being people-related. This information is supplemented by data from various other schedules and accounting records. During the feasibility phase at Homemade, 19 initial interviews and five follow-up interviews were conducted. Any employee considered to have significant knowledge of the consumption of the firm’s indirect resources was interviewed. Follow-up interviews to finalise resource and activity consumption were conducted with employees whose initial interview did not yield conclusive allocations of time to activities.

Innes and Mitchell (1992) contend that rationalisation of activities and drivers is necessary to effect an operational ABC system. A critical finding from the Homemade study is that data-collection can be significantly reduced by rationalising the number of defined activities. This is a particularly important issue, since many firms do not have the resources necessary to maintain a complex activity-based model.

FIGURE 4: ACTIWIY DEFINITION DECISION-MAKING PROCESS

i- Potential activity

Consider combining with other potential activities

no Indirect costs unique?

yes J- Activity driver distinctive?

Other factors justifying Human element? separate identification?

I Identify potential activity as a separate activity 1

no


In Homemade two major types of activity rationalisation are identified. Elimination of activities because of

a lack of materiality of the activity costs; the by-passing of resource costs direct to the cost object - for example, advertising costs are traced directly to a product or customer without having to pass through an activity cost pool; a defined activity not being sufficiently different from an established resource - for example, “repairs and maintenance” is traced to cost objects directly, rather than to an activity cost pool and then to products.

Merging of activities because oE commonality in the nature of activities - for example, “order ingredients” and “order packaging” consume similar amounts of time, making merger possible; commonality of activity drivers - for example, both ordering and storing raw materials use “number of material lines” as the activity driver, making it efficient to merge these activities for activity-based costing purposes; lack of resource-driver information - for example, it is impossible to split resource costs between “cool product” and “store cooled product” because of the non-availability of low-cost resource-driver information; lack of activity-driver information - for example, it is impossible to split storage costs between various customers because of the non-availability of low-cost activity-driver information.

APPLICATION OF CONSISTENT DEFINITION

DECISION RULES

Activity definition decision rules To overcome the difficulties associated with estab- lishing activity definitions, a decision-making process, developed from the Homemade case, is applied. The five-stage decision process is depicted in Figure 4 and applies equally to models that define activities for either activity-based management (the process dimension) or activity-based costing (the cost dimension) purposes.

Stage One indicates that if a potential activity does not generate unique, identifiable, non-product-direct costs, then it should be merged with other activities. An example might be “store packaging” where the location is a mezzanine floor that does not generate

of equivalent baskets, which may be the same as that of “load delivery trucks”. Considerable time and effort can be saved by combining these two activities to form a single activity, “assemble stock and load delivery trucks”.

Stage Three determines if the potential activity consumes a unique rate of resources. For example, some inspection activities may require separate examination because they consume relatively more resources than others.

Stage Four analyses whether a people-related element exists to support separation of the activity. The presence of the human factor tends to instigate resource-consuming activities, while its absence needs to be examined to determine if an overriding factor warrants the potential activity’s separate definition.

Stage Five is potentially the most crucial and demands advanced skills. If the potential activity is not material in terms of the costs it generates relative to other activities, the net benefit it yields after determining monitoring costs, or the impact on final product costs or activity management, then the activity should be merged with other potential activities.

Generalisations cannot be made about a suitable materiality level. However, Lockyer (1975) reports that Pareto optimality can be achieved through the application of an 80:20 rule. In Homemade, 20% of the activities generated approximately 80% of the costs, suggesting that an extended focus on the least important 80% of activities might be futile.

The reliability of this procedure can be verified by reference to the outcomes of Phase 2, where more than 90% of the activity structure developed in Phase 1 of the study was found to be robust. Although it is possible that some activities could have benefited from further rationalisation at the margin, the outcomes suggest that the Phase 1 activity definitions are an accurate representation of the company’s activity structure.

Ultimately, the only guidance for determining the net benefit of monitoring an activity comes from experience. Clearly, the hiring of additional employees to monitor activities and associated driver data could defeat the purpose of the exercise. The separate identification of an activity must either have a significant impact on the final product costs and the decisions to be made from such information, or a significant favourable impact on the efficient management of activities.

Consistent resource-driver definition rules any depreciation expenditure. Since this potential activity does not have unique costs, it should not be considered a separate activity.

Stage Two relates to the uniqueness of the associated activity drivers. While a potential activity such as “assemble delivery truck loads” generates unique indirect cost, its activity driver might be the number


At Homemade the definitions of resource drivers4 are complicated by:

systems that do not trace all labour oncosts direct to the appropriate labour component - for example, general ledger systems typically group vehicle operating costs for salespersons to a vehicle expense account, with the costs not being

l i k e d to the individual salespeople; mezzanine factory floors that generate activity, but do not constitute a consumption of occupancy resources; exceedingly high costs of monitoring the consumption of utilities by machinery. The interview process identifies the following as

critical questions in defining resource drivers at Homemade:

Have all the on-costs been included in determining the value of human resources expenditure? A checklist is developed of items “hiding” in the general ledger that should flow directly into salary accounts for the purposes of allocating to activities. This prompts preparation of cross-functional expenditure analyses.

Have time allocations been determined as accurately as possible? In Homemade, two-week diaries are used to collaborate the interview findings. Diaries are preprinted and workers are required sim- ply to tick appropriate boxes. Each position requires a different activity diary because the diary columns are developed from activities stated by the incumbent during interview.

Can activities be linked to floorspace? Floorspace is a useful, and often easier, resource driver to use than the available alternatives. For example, in deciding to allocate lighting costs by either floorspace or kilowatts per hour, floorspace will usu- ally be preferable since it obviates the need to collect kilowatt-hour statistics. Where floorspace is difficult to identify for each activity, then it may be necessary to use another basis for allocating this resource. A number of activities may occur in the same floorspace, making it difficult to assign occupancy costs to activities; this problem can be overcome by applying human intervention allocations to the floorspace resource. For example, it is difficult to allocate rent to a piece of space that is used for a variety of activities during the day (storing, waiting prior to packing, recoding). To help determine the percentage of rent applicable to each of these activities we might use the percentage of human time spent on each activity on a regular day. IfA spends 10% of his time storing goods, B spends 10% of her time moving goods from waiting to packing line, and C spends 10% of his time recoding stock, and A, B and C are of equal value to the firm, then a floorspace allocation to each of the activities would apportion the rent applicable to the floorspace equally between the three activities.

Will benefits of monitoring kilowatt consumption exceed associated costs? If additional meters have to be installed at different stages of the production process to monitor kilowatt consumption, it is most likely that costs will exceed benefits. At Homemade this problem is resolved by using esti- mates, that consider both the varying quantities of power consumed by each machine and the amount of time corresponding to the resource consumption.

Can the existing fixed asset software assign machinery to activities? The same machine might be used for multiple purposes. Organising machinery on an asset register by activity is made easier by efficient ked-asset software that can organise not only whole machines by activity but also a share of machinery to various activity headings. Firms without access to such software could consider a careful- ly constructed spreadsheet to produce the appropriate resourceallocation data.

Resolution of the above resource driver issues reveals that the core of the Homemade resource expenditure has been allocated to activities. Given that the majority of the resource cost is assigned to activities by resolving the questions described above and that most of the balance of the resource cost is assigned to activities using some logical estimate, then the final activity costs are unlikely to contain significant distortions resulting from inappropriate allocations.

Activity driver definition rules The Homemade data reveals that the definitions of activity drivers are complicated by the fact that many activities can yield more than one activity driver. This is caused by viewing a potential driver from the per- spectives of time, diversity, economies of scale, batch- es, quantities, transactions, weight, capacity, and distance. For example, the dehition of the activity driver for “deliver s tock requires consideration of the following:

the time it takes to deliver the product to the

special delivery requirements for each type of

whether a delivery is part of a round of deliveries

the quantity of product to be delivered; the number of deliveries to be made; the weight of the product to be delivered; the capacity of a truckload; and the distance to be travelled to the customer. Accordingly, this activity may have several drivers,

each reflecting one or more of the above factors. No particular driver appears better than any other. Roth and Borthick (1991) suggest that regression methods be used to determine the appropriate driver. However, in most firms past observations of drivers cannot be extracted for all potential activity drivers, making regression useful in only very limited cir- cumstances.

The following guidelines are developed to reduce the time consumed by the activity-driver definition process:

Establish decision rules for selection of an activity driver. For example, an emerging pattern is apparent in the selection process that first identifies a dominant resource in an activity cost pool and, second, associates this resource with an appropriate


customer;

product;

or a special delivery for one customer only;

activity driver. Developing this pattern into an established decision rule for other activity-driver selec- tions accelerates the selection process. With the activity “inspect ingredients”, we know that the activity driver can easily be related to volume of ingredients. Similarly, any activity that comprises mainly human effort allows the focus on human effort to be related to the activity driver. The activity “assemble loads” is mainly assembler’s time spent on assem- bling loads, so that “number of loads” is an efficient activity driver. Problems still arise where activity pools comprise a combination of human effort, floorspace resource, machinery usage, etc. Then the selection of the activity driver is much more problematic.

Accept that some of the drivers will be volume-based. While an ABC approach favours the use of non-volume-related drivers, this should not deter the selection of a volume-based driver for appropriate activities, such as “pack product”. In Homemade, a reluctance to accept volume-related .drivers for an activity-based system caused unneces- sary delays in finalising the activity drivers.

Record the justification for a selected driver. To avoid “reinventing the wheel”, the reasons for an activity driver selection are recorded in the activity dictionary database

Consider materiality as an overriding factor. If the activity costs are immaterial then the resulting allocation to a cost object is unlikely to affect decision-making. Accordingly, time spent debating the appropriate activity driver for such activities is wasteful.

ALLEVIATION OF MISCONCEPTIONS

Part of the process of correcting misconceptions requires wellchosen examples that illustrate how processes perceived as tightly controlled can actually be inefficient. In Homemade, sales representatives are required to report to the office daily and produce weekly reports. The activities of the representatives were considered to be tightly controlled until the results of interviews and diaries revealed that 35% of representatives’ time was spent travelling from client to client. An alternative arrangement reduced the travelling component of representatives’ activities immediately.

Homemade’s existing costing system traces materials and labour resources to products in a detailed manner. Overheads are traced to major cost pools and then allocated to products using the detailed labour rates as the basis of consumption. Given the firm is labour-intensive, concerns were apparent at the start of the ABC project that the resulting product costs might not differ significantly from the existing product costs. Examination of the product cost changes resulting from the implementation of an ABC methodology, for the six products initially under scrutiny, shows:


changes of less than 10% for each of the two high-volume standard products in the major core line; no change and a change of 20% respectively for the two standard products in the smaller core lines, and changes in excess of 100% for the two low-volume non-standard products. This last outcome was instrumental in the elimina-

tion of one product family from the product range. Clearly, while Homemade’s management may have been sceptical about whether ABC made a difference, the methodological power of ABC was illustrated by these outcomes and promoted its extension to the complete range of 170 products at the second phase of the project.

CONCLUSION In the application of ABC methodology, firms face four common difficulties: misconceptions of methodology, problematic data collection, poor technical s u p port and uncertainty in ABC model definitions. The net effect of these difficulties is that they can indicate an unfavourable cost-benefit outcome, which may cause some firms to dismiss the potential usefulness of ABC without due consideration.

ABC may or may not make a difference if relatively few products are made by the firm, although effec- tive management of activities can still lead to cost reduction, irrespective of the number of products. Even with as few as six products, the Phase 1 results identified above for Homemade greatly affected the decision to discontinue a particular product. Numerous other cost-saving efforts were attributable to a greater focus on the management of activities resulting from the feasibility study.

Armed with the findings from one successful ABC implementation, more firms should be encouraged to investigate the potential benefits of an activity-based costing system. Refinement of the framework pro- posed in this paper may provide avenues for further research into the ABC methodology extending beyond the manufacturing sector, and may encour- age studies over longer periods which will allow benefits at the implementation stage, and the effect on managerial behaviour, to be documented more fully.

Shane Dikolli is a lecturer in the School of Accounting, Curtin University, Perth, Western Australia, and Dr Malcolm Smith is an associate professor in the School of Economics and Commerce, Murdoch University, Perth, Western Australia.

NOTES 1 Technical support here embraces consultants’ fees, software costs, literature acquisition costs and the costs of ABC training.

2 A confidentiality agreement between the authors and the subject firm precludes disclosure of either the actual name of the company studied, or its products and activities, in order to guard against inter- company comparisons of commercially sensitive data. 3 Finished stock is packaged from 40 base products, the majority of which can be classified into three core product lines. 4 The terminology used in this paper is consistent with the definitions established in Raffish and Turney (1991). They identify a misuse of the term, “cost driver” and indicate that the correct term for a driver of resource consumption is a “resource driver”.

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implementing abc: an australian feasibility study

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