A Simplified Activity-Based Costing Approach for SMEs: The Case Study of an Italian Small Road Company

Abstract

Purpose:The paper proposes an original conceptual model for designing a simplified Activity-Based Costing (ABC) approach for Small and Medium-sized Enterprises (SMEs) by focusing on the transport sector. Design/Methodology/Approach: The model is designed starting from the distinctive characteristics of the SMEs' collaborative culture. The approach is then tested in the case of an Italian small-road company. Findings: The simplified ABC, which was gradually introduced in the SME, allowed the firm to gain confidence with the costing system. Moreover, the discussion of the results led to identifying the main areas to improve. Practical Implications: Costing systems based on collaboration can lead to operational improvements in SMEs operating in dynamic and competitive sectors as transport. Moreover, advanced technologies may hold a crucial role for their development. Originality/Value: Not much research has considered collaboration as a driver for introducing ABC in SMEs. The paper contributes to the literature on simplified managerial approaches, suggesting trends for future research.

Activity-based pricing in small and medium-sized restaurants. Evidence from the Italian context

“…For this reason, we believe that, first of all, cost allocation systems, able to balance the cost of errors and measurements with the lower complexity of small and medium enterprises (Cooper and Kaplan, 1998; Needy et al , 2003; Raucci and Lepore, 2020), can be a useful solution to support decision-making and pricing mechanisms, especially when matched with PSM. In small and medium-sized restaurants some simplified approaches of ABC for small and medium enterprises, tested already in other sectors, can be extended to facilitate their implementation.…”

“…In small and medium-sized restaurants some simplified approaches of ABC for small and medium enterprises, tested already in other sectors, can be extended to facilitate their implementation. Suggested approaches are based on exploiting informal processes of behavioural control (Kocakulah et al , 2017; Raucci and Lepore, 2020), others suggest a low-weight ABC model for calculating costs (Roztocki et al , 2004) especially taking advantage of technology (Finke and Bušinska, 2011). In this perspective of simplification, the suggested costing system for the restaurant can take into account the whole organization as a single activity center, as also proposed by Annaraud et al (2008).…”

“…From this matching in the activity-based pricing approach, it is possible to support managerial decisions regarding the profitability of each dish and different pricing policies of the restaurant. Furthermore, by leveraging on the informal conditions existing in small and medium enterprises, it may be possible to further benefit from these simplified ABC approaches (Needy et al , 2003; Raucci and Lepore, 2020).…”

“…However, as evidenced by the literature on small and medium-sized enterprises for other sectors, the firm dimension can constitute one of the main barriers to the adoption of more advanced costing systems, such as ABC. In fact, the implementation of the latter, especially in the small and medium-sized organizations, is often considered to be excessive and unjustified in a cost-benefit analysis (Gunasekaran et al , 1999; Needy et al , 2003; Raucci and Lepore, 2020). In this perspective, Cooper and Kaplan (1998) underline how ABC was designed to facilitate more accurate cost information, with an approach to flexible and adaptable implementation to the nature of analyzed businesses.…”

A Comprehensive Literature Analysis on the Modern Perspective of Management Accounting, Focusing on its Origins and Evolutionary Trajectory

“…The research also revealed that MAPs have a strong correlation with firm performance. Increased adoption of MAPs has a positive impact on the financial performance of an organization, so organizations seeking to create and maintain a competitive advantage should increase their use of MAPs [58].…”