This study identifies the various elements and factors that a financial services company needs to consider when implementing activity-based costing. This study evaluates the appropriateness of activity-based costing for financial services and proposes an implementation framework for activity-based costing in this environment. Management, in today’s constant changing and competitive world, needs management information to support strategic and pricing decisions. Traditional financial accounting information sometimes hides the economic reality of client profitability and product costs, and does not supply sufficient information for pricing decisions. This study confirmed that activity-based costing can assist in addressing this problem. Activity-based costing was originally developed for the manufacturing environment. By studying available literature, this study proved that activitybased costing can be used successfully in a financial services environment. A manufacturing environment has a higher direct cost input than a services environment. The cost structure in a services environment allows a higher percentage of cost to be allocated by identifying activities and using cost drivers to allocate these costs to cost objects. Activity-based costing models add value to management by supplying them with information that supports strategic decisions, pricing decisions, understanding client profitability and product costs. This study points out that there are crucial success factors that need to be considered before embarking on the implementation of activity-based costing. Finally the study proposes that activity-based costing be implemented in a financial services environment to support management decision making. / Prof. A.L. Boessenkool
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:8635 |
| Date | 24 April 2008 |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
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