Activity-based costing approach in the measurement of cost o(4)

TheCoQreportprovidedseveralconsiderableadvantagestothecompany.First,withtheuseofCoQ/ABC,theactivitiesandassociatedcostswereclassi edasquality-relatedorquality-unrelatedandVAorNVAintermsofactivities.Thisclassi cationallowsman-agementtodetecttheopportunitiesforcostreductionandtheeliminationofNVAactivi-tieswhichcouldbeusedincostmanagementwhileimprovingthequalityoftheproduct.Second,themeasurementandreportingofCoQprovideopportunitieswhichcouldbeusedbytheorganisationaslong-termperformancemeasurements.Finally,theCoQreportpre-sentsthecostofeachproductbyactivityandqualitybasis,whichcouldbeusedtocomparethecontributionofeachproducttothecompany.Discussionandconclusion

TQMandCoQhavebecomestrategicmanagementissuesbothforacademicsandprac-titionerssincethe1950s.Inthequalityliterature,thereareseveralstudiesattemptingtomeasureCoQbothintheoryandpractice;however,thenumberofsuchstudiesintheaccountingliteratureisverysmall.Theattemptstocorrectqualitywithcostinformationarerare,duethedif cultiesencounteredinthemeasurementofCoQundertraditionalcostaccountingmethods.Moreover,somestudiesasserttheimpossibilityofmeasuringqualitycosts.Inaddition,TQMandCoQmeasurementsareusuallypresumedtobestrategictoolsforlargerorganisations.However,consideringthatmanySMEsare exible,innovative,opentochange,operateinhighlycompetitivemarkets,andconstitutealargeportionofthetotalenterprisesintheworldeconomy,thisstudyaimstoexploretheroleofABCasanalternativecostingmethodinsupportingthemeasurementofCoQfortheseorganisations.

TheresultsofthecasestudyshowthattheuseofABCfacilitatesmeasuringandreportingCoQbydetectingNVAquality-relatedcosts.TheCoQreportunderABCpro-videsorganisationwiththeopportunityforimprovingcostandqualitycontrol,andthere-forecompetitiveness,andithasbeenshownthatCoQmeasurementunderABCcanbeeffectivelyusedbysmallenterprises.

ThisstudyalsosuggestthatwiththeuseofCoQ/ABC,organisationsmaybeabletodetectandmonitortheareasofpoorperformancethatrequireimprovement,controlandmanagequality-relatedcostsand,consequently,gaincompetitiveadvantagebyimprovingthequalityandreducecosts.Overall ndingsofthecasestudyareincompliancewithPrickettandRapley(2001),Bottorff(1997)andWeinsteinetal.(2009).

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Whilethe ndingsofthestudystemfromasinglesmallenterprisecase,itshouldbe

notedthatthese ndingsarestillgeneralisable,becausetheproposedmethodologyofCoQ/ABCisnotsolelydesignedforsmallenterprisesandcanbeimplementedbyawiderangeoforganisationtypesregardlessofsize,andwhetherforpro tornonpro t.

ThecasestudyalsoshowedthatthesuccessofABC/CoQimplementationdependsonanawarenessofCoQ,andunderstandingoftheprocess/activityviewintheorganisation,strongcommunicationbetweentechnicalandaccountingpersonnel,ahighlevelofman-agerialsupportandinvolvement,andawell-organisedcross-functionalteam.

Themainlimitationofthestudyisitsnarrowfocusonmanufacturing-relatedCoQ.ItisclearthatCoQmeasurementshouldincludetheanalysisofallkindsofactivitiesinanorganisation.Thus,furtherresearchmayconsiderbothmanufacturingandnon-manufac-turingactivitiesoftheorganisationsinordertoprovideorganisation-wideCoQinfor-mation.Moreover,studiesconcerningserviceorganisationsalsohavethepotentialtomakeavaluablecontributiontotheCoQliterature.References

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