Magazine article The CPA Journal

Letters to the Editor

Magazine article The CPA Journal

Letters to the Editor

Article excerpt

ACTIVITY-BASED COSTING IS NO QUICK FIX

Your CPA in Industry article in March Selline Activity-Based Costing," by John C. Lere, was interesting and informative but it omitted a key element if an activity-based costing (ABC) program is to be successful.

ABC is not a stand-alone technique-- it is only one of the interactive components that include ABM, reengineering, continuous improvement, and productivity improvement. ABC cannot be implemented without first utilizing activity-based management (ABM) methodology, the operational side of decision making.

Unfortunately, corporate America generally is not willing to take the time to understand the activities that make up a given business. The predominant tendency of these shortsighted executives is to seek out a silver bullet that will provide them with a solution to a problem without having to do much work. This quick-fix course of action usually translates into purchasing one of the many available ABC software packages. In this age of technology software has replaced the gypsy tea-leaf reader as the provider of quick solutions. …

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