Integrating activity‐based costing with simulation and data mining

Abstract

Purpose -This paper aims to present a methodology for activity-based costing, which combines simulation modeling and association rule mining, one of the core data-mining techniques. The objective of the proposed methodology is to deal with the problem of defining cost drivers. Design/methodology/approach -Activity-based costing uses the output produced by the simulation of cost drivers as inputs. As opposed to the integration of the ABC technique with simulation modeling, the possibility of estimating an empirical distribution of the simulated cost drivers does not exist in the proposed methodology. This is achieved with the use of data-mining techniques and is based on the proposition that, if an association is found between a cost driver, whose estimation or calculation is time-consuming, and another cost driver, which can easily be estimated or calculated, then the latter can lead to the estimation or calculation of the former. Findings -The extracted association rules correspond to existing dependencies between the cost drivers. Originality/value -The paper presents a combined methodology to deal with the problem of defining cost drivers in activity-based costing. An example of the proposed methodology in healthcare is also presented.

The indirect effects of intranet functionalities on middle managers' performance

“…This seems to be a universal phenomenon where organizations in many countries experience intricacy and even failure in transferring IT into practice (Abdul Hamid, 2001;Gil-Saura et al, 2009). The lack of a comprehensive model explains why there is little success in adopting intranet albeit the heavy investment made (Dan, 2002;Iyer et al, 2005;Jamshed, 2006;Kostakis et al, 2008;Legris et al, 2002) particularly in developing countries (Cunningham and Sarayrah, 1994). This could serve as a primary reason as to why top management of organizations, both public and private constantly question whether such investment leads to expected desirable outcomes, which makes successful intranet implementation more difficult to achieve.…”

Cost modelling of the product mix from mining operations using the activity-based costing approach

“…ABC is a cost accounting methodology, aimed at allocating costs properly. ABC uses cost drivers to appoint the costs to activities and basis of a cause and effect relationship with the products (Kostakis et al, 2008).…”

Evaluating the Use of the Activity Based Costing Method in the Construction Industry in the V4 Countries

“…The role of direct labor in modern production environments has decreased, but at the same time, the level of support services has increased. Traditional methods of calculating the cost do not take into account this increased complexity and still distribute overhead costs by reducing their working base or even do not take into account overhead costs [17], [18]. Traditional cost accounting methods were developed at a time when direct costs of labour and material factors of production were dominant and when changes in technology and consumer demand were not so fast.…”