Thesis (Ph. D.)--Lehigh University, 1999. / Includes vita. Includes bibliographical references.

The activity-based costing (ABC) system is a cost allocation technique which appears to have many benefits over the traditional costing systems. However, companies that have attempted to implement ABC have encountered various difficulties. Thus, there is a need to investigate the problems faced by companies while implementing ABC. The main objective of this study was to find solutions to overcome the problems encountered by South African companies during the implementation of an activity-based costing system.

Natural gas plants can have multiple owners for raw natural gas streams and processing facilities as well as for multiple products. Therefore, a proper cost allocation method is necessary for taxation of the profits from natural gas and crude oil as well as for cost sharing among gas producers. However, cost allocation methods most often used in accounting, such as the sales value method and the physical units method, may produce unacceptable or even illogical results when applied to natural gas processes. Wright and Hall (1998) proposed a new approach called the design benefit method (DBM), based upon engineering principles, and Wright et al. (2001) illustrated the potential of the DBM for reliable cost allocation for natural gas processes by applying it to a natural gas process. In the present research, a rigorous modeling technique for the DBM has been developed based upon a Taylor series approximation. Also, we have investigated a cost allocation framework that determines the virtual flows, models the equipment, and evaluates cost allocation for applying the design benefit method to other scenarios, particularly those found in the petroleum and gas industries. By implementing these individual procedures on a computer, the proposed framework easily can be developed as a software package, and its application can be extended to large-scale processes. To implement the proposed cost allocation framework, we have investigated an optimization methodology specifically geared toward economic optimization problems encountered in natural gas plants. Optimization framework can provide co-producers who share raw natural gas streams and processing plants not only with optimal operating conditions but also with valuable information that can help evaluate their contracts. This information can be a reasonable source for deciding new contracts for co-producers. For the optimization framework, we have developed a genetic-quadratic search algorithm (GQSA) consisting of a general genetic algorithm and a quadratic search that is a suitable technique for solving optimization problems including process flowsheet optimization. The GQSA inherits the advantages of both genetic algorithms and quadratic search techniques, and it can find the global optimum with high probability for discontinuous as well as non-convex optimization problems much faster than general genetic algorithms.

Natural gas plants can have multiple owners for raw natural gas streams and processing facilities as well as for multiple products. Therefore, a proper cost allocation method is necessary for taxation of the profits from natural gas and crude oil as well as for cost sharing among gas producers. However, cost allocation methods most often used in accounting, such as the sales value method and the physical units method, may produce unacceptable or even illogical results when applied to natural gas processes. Wright and Hall (1998) proposed a new approach called the design benefit method (DBM), based upon engineering principles, and Wright et al. (2001) illustrated the potential of the DBM for reliable cost allocation for natural gas processes by applying it to a natural gas process. In the present research, a rigorous modeling technique for the DBM has been developed based upon a Taylor series approximation. Also, we have investigated a cost allocation framework that determines the virtual flows, models the equipment, and evaluates cost allocation for applying the design benefit method to other scenarios, particularly those found in the petroleum and gas industries. By implementing these individual procedures on a computer, the proposed framework easily can be developed as a software package, and its application can be extended to large-scale processes. To implement the proposed cost allocation framework, we have investigated an optimization methodology specifically geared toward economic optimization problems encountered in natural gas plants. Optimization framework can provide co-producers who share raw natural gas streams and processing plants not only with optimal operating conditions but also with valuable information that can help evaluate their contracts. This information can be a reasonable source for deciding new contracts for co-producers. For the optimization framework, we have developed a genetic-quadratic search algorithm (GQSA) consisting of a general genetic algorithm and a quadratic search that is a suitable technique for solving optimization problems including process flowsheet optimization. The GQSA inherits the advantages of both genetic algorithms and quadratic search techniques, and it can find the global optimum with high probability for discontinuous as well as non-convex optimization problems much faster than general genetic algorithms.

Diss. Linköping : Univ., 2002.

The value of cost allocation comes from its initial purpose; decision support. In other words, cost allocation is considered a vital part of management, as it generates valuable information concerning efficiency and profitability. By applying Time Driven Activity Based Costing (TDABC) in a financial service company, this pilot study aims to learn from the consequences of the application, and discuss the lessons learned. The application resulted in a two-step allocation using Traditional Cost Allocation in the first step and TDABC in the final step, wherethe overhead cost of four support departments were allocated down to products. To build the model, interviews were conducted with personnel and internal documents were used. The application's most important lessons are thedifficultyofidentifying and measuring activities, the model’s requirement of high-quality data and the complexity of the capacity measures.

No description available.

No description available.

Titel Rättvisa priser – En fallstudie på Volvo Construction Equipment (CE)Nyckelord Kostnadsfördelning, produktkalkylering, rättvis kostnadsfördelning, aktivitetsfördelning,värdeskapande aktiviteter.Syfte Syftet med fallstudien är att kartlägga värdeskapande aktiviteter, undersökavilken aktivitet som differentierar produkterna bäst och se hurprocesstiden/tiderna för en aktivitet kan användas som fördelningsnyckel vidfördelning av kostnader.Målningsprocessens aktiviteter har grundligt granskats och av dessa har de värdeskapandeprocesserna identifierats. Två slutsatser har dragits av fallstudien: Den tid som differentierar produkterna bäst är mantiden. Desto fler aktiviteter som involveras i kostnadsfördelningen, desto rättvisare blirkostnadsfördelningen. En summering av tiden i målningsroboten, rengöringen ochmantiden resulterar i ett bra underlag att kostnadsfördela på. Med reservation för attarbetet som utförs av operatörerna, mantiden, helst ska vara standardiserat.Produktkalkylering handlar om att fördela ett företags kostnader på dess produkter, vilket ärlättare sagt än gjort. Problemet kring kostnadsfördelning har diskuterats fram och tillbaka desenaste femtio åren. Hur ska ett företag fördela sina kostnader, direkta och indirekta, på sinaprodukter och tjänster för att de ska generera ett rättvist pris för produkterna och tjänsterna? Dedirekta kostnaderna är enkla att härleda till sitt kostnadsobjekt, men de indirekta kostnaderna ärbetydligt besvärligare.Studien undersöker vilka processer som är värdeskapande i målningsprocessen och av dessaprocesser har fyra olika scenarier skapats. Varje scenario består av olika värdeskapandeaktiviteter och deras processtider. Finansavdelningen på Volvo CE simulerade enkostnadsfördelning med varje scenario som underlag för fördelningen och utfallet avsimuleringen analyserades.Studien är gjord som en fallstudie på måleriavdelningen på Volvo CE. Författarna är EmiliaVardanyan och Erik Söder. Handledare på högskolan är universitetslektor Antti Salonen ochhandledare på Volvo CE produktionschef Josef Lännerstöm. / Title Fair prices – A case study in Volvo Construction Equipment (CE)Keywords Cost allocation, product costing, fair cost allocation, activity allocation, valueaddedactivities.Purpose The purpose of this paper is to locate the value added activities, investigatewhich activity that differentiate the products best and see how the processtime/times for an activity can be used as an allocation key for allocating costs.The activities at the department of painting have been examined and the value-added activitiesof these have been identified. Two conclusions have been made by the work. The time that differentiate the products best are the manual time, the work performedby man. The more activities that the cost allocation includes the more correct and fair thecalculation will be. The sum of the time in the painting robot, the cleaning process andthe manual time result in good a basis for cost allocation. With the reservation that thework performed by man should be standardized.Product calculation is about allocation of the cost in a company, which is easier said than done.The problems related to cost allocation has been discussed back and forward the latest fiftyyears. How should companies allocate their costs, direct and indirect costs, on their productsand services to give their products and services a fair price? The direct costs are easy to deriveto their cost object, but the indirect costs are way harder to work with.This paper investigates which processes that are value-adding in the paint shop and from theseprocesses four scenarios are made. Every scenario is made of different value-added activitiesand their process times. The finance department at Volvo CE simulated a cost allocation withevery scenario as basis and the result of the simulation were analysed.The work has been done as a case study in the paint shop at Volvo CE. The authors are EmiliaVardanyan and Erik Söder. The supervisor at Mälardalens university are associated professorAntti Salonen and the supervisor at Volvo CE are manager production engineering assemblyJosef Lännerström.

<p>Bakgrund: Dagens industriföretag har ägnat mycket tid och tankeverksamhet åt att förbättra produktiviteten men i regel betydligt mindre till att beräkna enskilda produkters kostnader. Allt högre krav ställs på en kundanpassad produktion med differentierade produkter. Produkternas heterogenitet innebär även heterogen resursförbrukning och det gör det svårt att veta vilka kostnader en produkt verkligen orsakar. Inom ABC är det kostnadsdrivarens uppgift att koppla samman resursförbrukningen med produkterna. Valet av kostnadsdrivare kan ge stora effekter på produktens kostnad och visa att produkter som tidigare betraktas som lönsamma säljs med förlust.</p><p>Syfte: Syftet är att beskriva och analysera problematiken kring val av kostnadsdrivare.</p><p>Genomförande: En fallstudie har genomförts kring val av kostnadsdrivare vid Swedish Tissue.</p><p>Resultat: Det finns inga optimala kostnadsdrivare utan en komplex avvägning med kalkylens syfte i bakhuvudet krävs. Riktlinjen bör inte vara perfekt kausalitet utan minimering av totalkostnaden. Denna består av mätkostnad för kostnadsdrivaren och felkostnad orsakad av beslut baserade på kalkyler med brister i beroende på valet av kostnadsdrivare. Hänsyn måste även tas till beteendeeffekter som kostnadsdrivare medför, vilka kan vara avgörande. En avvägning måste göras mellan variablerna mätkostnad, felkostnad och beteendeeffekter men det är kontexten; företagets struktur, informationssystem och strategi, som avgör komplexiteten. I uppsatsen utvecklas en modell för att analysera totalkostnaden vid valet av kostnadsdrivare där de tre variablerna står i fokus.</p><p>Vid ledig kapacitet måste företag ha klart för sig hur de ska hantera kostnaden för denna innan valet av kostnadsdrivare sker, då valet kan påverka kalkylens lämplighet som styrningsverktyg. En analysmodell utvecklas med syftet att fungera som stöd vid beslutsfattande om hur ledig kapacitet skall hanteras.</p><p>Diskussionen kring problematiken vid ledig kapacitet bör kunna generaliseras till alla företag med ledig kapacitet allra helst företag i process- och tillverkningsindustrin. Problematiken som diskuteras med hjälp analysmodell II bör vara giltig, om än av olika vikt, för alla företag som använder sig av kostnadsdrivare men kanske även för alla som överhuvudtaget använder sig av kostnadsfördelning oavsett kalkylmetod.</p> / <p>Background: Today’s industrial concerns have devoted considerable time and attention to improve productivity, but usually significantly less to calculate individual product costs. The demand for customised production with differentiated products is continuously increasing. The product heterogeneity also leads to heterogenic resource consumption, which makes it hard to determine what costs a product causes. In ABC the cost driver’s function is to link the resource consumption with the products. The choice of cost drivers can have large effects on the product’s costs and reveal that products previously regarded profitable are sold with a loss.</p><p>Purpose: The purpose is to describe and analyse the difficulties regarding choice of cost drivers.</p><p>Completion: A case study concerning the choice of cost drivers has been carried out at Swedish Tissue.</p><p>Result: There are no optimal cost drivers. A complex assessment of the pros and cons has to be performed with the costing systems purpose taken into account. Perfect causality should not serve a guideline bur rather to minimize total cost. It includes the cost driver’s cost of measurement and cost of errors caused by decisions based on product costing systems allocating costs poorly caused by the choice of cost driver. Behavioural effects resulting from the choice must also be considered as they can be decisive. An assessment of these three variables has to be conducted, but it is the context, the company structure, the information system and the strategy that determines the complexity. A model for analysing total cost when choosing cost drivers has been developed, in which the three variables are in focus.</p><p>In case of free capacity companies must know how to handle its cost prior to choosing cost drivers. The choice can affect the appropriateness of the product costing system as a tool for management control. A model has been developed with the purpose to assist in decision making situation regarding handling of free capacity.</p><p>The discussion concerning free capacity difficulties should be possible to generalise to all companies with free capacity, but primarily to companies within the processing and manufacturing industries. The difficulties discussed by means of analysis model II should be valid, however of different importance, to all companies using cost drivers, but probably also for companies in general that practice cost allocation regardless of cost system</p>