Activitybasedcostinginmanufacturingtwocasestudieson.docVIP

Activity based costing in manufacturing: two case studies on implementation The Authors Amrik S. Sohal, Department of Management, Monash University, Australia Walter W.C. Chung, Department of Manufacturing Engineering, Hong Kong Polytechnic University, Hong Kong Acknowledgements The authors are grateful to the Financial Controller at MelCo and to Mr Richard Siu, now Deputy General Manager of Ciba Specialty Chemicals (China) Ltd. They are also thankful to the Hong Kong Government Industry Department and The Hong Kong Polytechnic University (PolyU) for providing the funding to complete this paper and to Jimmy Ho who worked as a Research Assistant/Student on the ABC project at PolyU. Abstract This paper presents two case studies on the implementation of activity based costing (ABC). The first case is a company based in Melbourne, Australia, which manufactures engineering components. The second case study is a specialty chemicals company based in Hong Kong. The case studies discuss the introduction of ABC and the benefits and problems experienced during implementation in each company. Based on the experiences of the two companies, factors critical to successful implementation of ABC systems are identified. Article Type: Case study Keyword(s): Activity-based costing; Australia; Hong Kong; Implementation. Journal: Integrated Manufacturing Systems Volume: 9 Number: 3 Year: 1998 pp: 137-147 Copyright ? MCB UP Ltd ISSN: 0957-6061 Introduction Manufacturing organisations of today are much more complex than those of the 1960s and earlier years. To manage today’s manufacturing organisations managers require information which is relevant, accurate and readily available. Information is needed to formulate and operationalise functional strategies and to make decisions on product mix and production costs. Although production systems have changed to meet the changing needs of the marketplace, in many organisations the internal management accounting systems and informati