Integrating Activity-Based Costing and Economic Value Added in Manufacturing

Roztocki, Narcyz; Needy, Kim LaScola

doi:10.1080/10429247.1999.11415023

Cited by 38 publications

(23 citation statements)

References 2 publications

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“…As mentioned in the literature study above, a number of research studies merely mentioned the link between various performance measurement systems and value creation (Christopher & Ryals, 1999;Roztocki & Needy, 1999;Fletcher & Smith, 2004). However, none of these studies attempts to identify the value drivers statistically by using a multiple regression analysis.…”

Section: Value-based Managementmentioning

confidence: 99%

“…Such a performance measurement system will align performance measures with strategic objectives, select strategies that achieve these objectives and identify the value drivers that actually create value for the firm (Copeland, Koller and Murrin, 2000). Roztocki and Needy (1999) present a system that integrates activity-based costing (ABC) with the EVA financial performance measure. They argue that reducing costs by using tools such as JIT and TQM do not automatically create shareholder value.…”

Section: Performance Management In Manufacturing Firmsmentioning

confidence: 99%

“…The implementation procedure that Roztocki and Needy (1999) propose includes the selection of 'cost drivers'. They contend that operating cost drivers and capital cost drivers must be used to trace costs to products.…”

Section: Value Creation Measures In Manufacturing Firmsmentioning

confidence: 99%

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Drivers Creating Shareholder Value In South African Manufacturing Firms

Hall

2012

JABR

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The objective of this study was to analyse the value drivers of manufacturing firms listed on the Johannesburg Stock Exchange. Unique performance measurement tools and processes exist in the manufacturing industry. The creation and measurement of shareholder value however, should be the goal of any manager in a firm. In order to optimise shareholder value creation, it is necessary to identify value drivers that management can control. A multiple regression analysis was used to identify the significant micro-value drivers of South African manufacturing firms. It was found that the value drivers that are significant in the explanation of shareholder value are the cost of goods to sales percentage, the degree of manufacturing leverage and the capital investment in plant and equipment.Value-based management, incorporating these value drivers, can guide manufacturing managers towards optimal shareholder value creation.

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Section: Value-based Managementmentioning

confidence: 99%

Section: Performance Management In Manufacturing Firmsmentioning

confidence: 99%

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Drivers Creating Shareholder Value In South African Manufacturing Firms

Hall

2012

JABR

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“…EVA를 관리회계 관점에서 활동기준 원가인 ABC와 연계한 연구가 있으나 ABC원가에 대한 직접비와 간접 비의 구분이 없으며 [8], EVA에서 NOPLAT(Net Opera ting Profit Less Adjusting Tax)의 조정이 이루어지고 있지 않다 [26]. 또한 EVA 산출시 자본비용은 세후영업 이익인 NOPLAT에서 차감해야 하나 세전매출총이익에 서 간접판매관리비의 항목으로 잘못 차감되어 적용하 였다 [17,20].…”

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Development and Implementation of Extension Models for Activity-Based Costing

Choi¹

2014

Journal of the Korea Safety Management and Science

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The purpose of this research is to implement and develop the Economic Cost Driver Size(ECDS) extended model to determine the optimal cash driver size with measurement complexity cost and allocation fail cost. ECDS model can be used to seek both measurement accuracy and time efficiency of the Activity-Base Costing (ABC). The study also develops Activity Priority Number (APN) to evaluate the importance of nonvalue-added activities improvement and to determine the representative cost driver of value-added activities when applying ECDS model. APN consists of Severity Priority Number (SPN), Undetectablitiy Priority Number (UPN) and Occurrence Priority Number (OPN). APN can be obtained from lower-stream activity, current activity, upper-stream activity in terms of hierarchical dependency of SIPOC (Supplier, Input, Process, Output, and Customer). In order to seek both efficiency of invested capital and reduction of overhead cost, the paper proposes the integrated ABC and Economic Value Added (EVA) model using redesigned ABC-based statement of comprehensive income and EVA-based statement of financial position. For a better understanding of the proposed ABC-EVA integrated model, numerical examples are demonstrated in this paper. Cost drivers of ABC and capital drivers of EVA in the proposed model can be used to reduce activity overhead cost from ABC-based statement of comprehensive income and to lessen activity capital charge from EVA-based statement of financial position.

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“…In order to obtain complete (and therefore reliable) cost information, some authors proposed integrating the ABC system with the EVA (Hubbell, 1996a, b;Roztocki and Needy, 1998;Roztocki and Needy, 1999c;Cooper and Slagmulder, 1999). EVA, a registered trademark of Stern Stewart and Company, has been implemented in numerous large companies to motivate managers to create shareholder value (Dodd and Chen, 1996).…”

Section: Introductionmentioning

confidence: 99%

Right product pricing: Application of activity-based costing (ABC)-and- economic value added (EVA) as an integrated tool

Nikhil¹,

ra²,

Das³

2012

Afr. J. Bus. Manage.

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The traditional activity based costing (ABC) can be used as a more powerful and accurate pricing tool if integrated with economic value added (EVA), a value-based financial performance measure. The paper is targeted to discus the integrated ABC-and-EVA system that is considered as an engineering management tool used successfully to manage both cost and capital. It allows enterprise leaders to create shareholders value through cost structure improvement. In this integrated system, the cost of activities includes an equitable charge for the consumption of resources at one end and charge for capital demanded and used at the other end. The implementation process of the system is discussed and a comparison with the traditional ABC system is made to make it simple and decisive to the users. The process starts with the identification of activities and then income statement and balance sheet data is adjusted in line with EVA approach. This information is then transformed into transparent capital charges using activity-capital dependence (ACD) analysis, which has been added with the costs of each activity to have integrated total costs. The paper concludes with a discussion of possible changes to corporate strategies and business performance when the integrated ABC-and-EVA system is implemented in a manufacturing company for pricing their products.

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Integrating Activity-Based Costing and Economic Value Added in Manufacturing

Abstract: This paper examines the implementation of an integrated

Cited by 38 publications

References 2 publications

Drivers Creating Shareholder Value In South African Manufacturing Firms

Drivers Creating Shareholder Value In South African Manufacturing Firms

Development and Implementation of Extension Models for Activity-Based Costing

Right product pricing: Application of activity-based costing (ABC)-and- economic value added (EVA) as an integrated tool

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