Academic journal article Issues in Accounting Education

Developing, Marketing, Distributing, and Supporting an Activity-Based Costing Decision Support System for Schrader Bellows

Academic journal article Issues in Accounting Education

Developing, Marketing, Distributing, and Supporting an Activity-Based Costing Decision Support System for Schrader Bellows

Article excerpt

ABSTRACT: In this project, you will develop a database system that allows your clients to model different activity-based costing allocation schemes to calculate product costs. You will also develop a website to market, distribute, and support your system. You will "sell" your system to actual clients, and you will provide user support while the system is in use.

INTRODUCTION

This project places you in the role of information system developer. You will work as part of a team to develop an activity-based costing (ABC) decision support system (DSS). You will market your system and compete with other developer teams to obtain clients. You will offer two distribution options for your ABC DSS: a downloadable version and an online version. Finally, you will provide user support while your clients use the system to complete a very important project of their own.

You may experience some frustration and anxiety while completing this project. Depending on your technical information systems background, you may have to develop and/or refine your skills in using spreadsheet, database, and web design programs--and you may have to do some of this work on your own. You will have to do a lot of thinking about how to market your ABC DSS effectively (this might be a particular challenge to those with a more technical background). Finally, you will have to work together effectively and determine how to resolve any conflicts that arise within your team.

Why would your instructor subject you to all of this? The goal of this project is not to torture you (I swear), but to provide an experience that is as similar to real systems development as possible. In keeping with this goal, there will be real decisions to make, real skill differentials to deal with, real clients to please, and real opportunities to fail. When you complete this experience, you can honestly say you have a feel for the field of information systems development. If your goal is to become an information systems consultant, then you will have a bit of experience and will be able to speak with more confidence and knowledge in your interviews. If your career goal is in auditing, then you will have a better understanding of how information systems are built and how to troubleshoot these systems. If your goal is to work in the corporate world, then you will have a better understanding of costing issues, and how to design information systems to best support internal decision making. Finally, regardle ss of your career goal, you will have a better understanding of how to deal with clients and how to work as a part of a team.

Below is a summary of the scenario at Schrader Bellows and the set of requirements for the project. Be determined, be patient, be creative, and most of all--have a good time!

SCHRADER BELLOWS

Schrader Bellows (SB) is a company that manufactures, among other things, flow control valves. However, SB is not just an assembler; many of the components for the valves are manufactured by SB as well. Recently, SB has been experiencing some financial difficulty and profits have dropped alarmingly. It was suggested that the implementation of an activity-based costing (ABC) system might provide the information necessary to turn the firm around. The firm has begun implementation of ABC on a small scale, at the Wake Forest plant, but substantial work remains to be done. An important part of that work will be done by you.

Your first instinct will probably be to ask for information about the overhead budget at Schrader Bellows. This budget is reproduced in Exhibit 1. Note that overhead has been broken down into three categories: manufacturing overhead, support overhead, and fixed plant overhead. SB management tells you that they want to use ABC analysis to allocate only the support overhead (i.e., Departments 230-260). Management is content with the allocation process for the remaining overhead. Thus, you should continue management's practice of allocating the manufacturing overhead and the fixed plant overhead to the products based on direct labor hours. …

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