ADVAN1AGLS

A8C analysls ls baslcally used ldenLlfy valueadded and nonvalue added acLlvlLles and
benchmarklng aL each acLlvlLy level dlrecL lmprovemenL efforLs ln Lhe rlghL dlrecLlon Accordlng
Lo SLapleLon eL al (2004) some Lhe advanLages of A8C cosLlng are as follows
1 A8C helps flrms Lo become more efflclenL and effecLlve
2 lL provldes a clear plcLure regardlng where resources are belng spenL how cusLomer value
ls belng creaLed and where along Lhe process ls money belng made or losL
3 lL also offers an lmproved alLernaLlve Lo laborcosLbased producL cosLlng
4 lL also adequaLely ldenLlfles valueadded acLlvlLles
3 lurLhermore A8C ellmlnaLes or reduces nonvalue added acLlvlLles
1he nonvalue added acLlvlLles LhaL are ldenLlfled Lhrough A8C can be ellmlnaLed by uslng
dlfferenL managemenL meLhodologles and Lechnlques lurLhermore managemenL can look
lnLo Lhe posslblllLles of lmprovlng Lhe valueadded acLlvlLles 1he cosL drlver of each acLlvlLy can
be used Lo measure Lhe performance of acLlvlLles (Cunasekaran Slngh 1999)
1he beneflLs of A8C however can only be achleved lf lL ls lmplemenLed for Lhe whole
organlzaLlon 1herefore lL ls recommended LhaL any company uslng A8C should use lL for all of
Lhelr producLs Lo calculaLe Lhe cosL of producLs and producL proflLablllLy accuraLely
(Cunasekaran Slngh 1999)
DISADVAN1AGLS]CnALLLNGLS
esplLe lLs many advanLages from managerlal vlewpolnL A8C poses several challenges when lL
comes Lo belng lmplemenLed ln Lhe servlce secLor 1hese challenges however are noL appllcable
Lo manufacLurlng secLor 8oLch (1990) has explalned ouLllned Lhe followlng challenges of A8C
1 lL's harder Lo deflne Lhe ouLpuL
2 eLermlnlng acLlvlLles and cosL drlvers ls noL usually a slmple Lask
3 MeasuremenLs and daLa collecLlon can prove Lo be more complex Lhan manufacLurlng
4 Any acLlvlLy ln response Lo servlce requesLs maybe less predlcLable
3 !olnL capaclLy represenLs a hlgh porLlon of LoLal cosL and ls dlfflculL Lo llnk ouLpuL relaLed
acLlvlLles
Pence Lhe ouLpuL of Lhe processes of Lhe loglsLlcs organlzaLlons cannoL be represenLed as
easlly as Lhe ouLpuLs of manufacLurlng organlzaLlons 1hls mlghL be due Lo Lhe facL LhaL
acLlvlLles performed ln a manufacLurlng organlzaLlon are generally known wlLh cerLalnLy buL
Lhey cannoL be easlly deflned ln many servlce and loglsLlcs organlzaLlons (8aykasoglu and
kaplanoglu 2008)
8aykasoglu and kaplanoglu (2006) have ldenLlfled anoLher challenge of Lhe appllcaLlon of A8C
Lo loglsLlc organlzaLlons le Lhe complexlLy of Lhe loglsLlc work processes 1hey concluded ln
Lhelr research LhaL complexlLy of buslness processes Lend Lo lncrease Lhe load of A8C
calculaLlons
CCNDI1ICNS ICk SUCCLSSIUL IMLLMLN1A1ICN
Accordlng Lo A Cunasekaran (1988) lssues such as Lop managemenL commlLmenL educaLlon
and Lralnlng of employees lncenLlves Lo moLlvaLe employees play a ma[or role ln Lhe successful
lmplemenLaLlon of A8C ln pracLlce 1he deLalls of Lhe condlLlons exLracLed from several case
sLudles Lo deLermlne successful lmplemenLaLlon of A8C are presenLed below
1 1op management comm|tment 1he Lop managemenL should be commlLLed Lo a
change ln Lhe cosL accounLlng sysLem 1hls change program wlll requlre sulLable
guldance moLlvaLlon and flnanclal and Lechnlcal supporL 1he Lop managemenL should
encourage Lhe lmplemenLaLlon of A8C by provldlng Lhese supporLs

2 Lducat|on and tra|n|ng of emp|oyees on A8C 1he concerned employees of Lhe
organlzaLlon should be equlpped wlLh Lhe knowledge of A8C and should be aware of Lhe
beneflLs LhaL can be derlved from lL lor Lhls purpose semlnars should be arranged Lo
Leach and dlscuss Lhe concepLs of A8C and lLs lmplemenLaLlon lssues ln Lhe facLory
mpowerlng employees ls anoLher lmporLanL aspecL of Lhe lmplemenLaLlon of A8C 1hls
wlll help moLlvaLe employees ln Lhe lmplemenLaLlon process

3 Incent|ves to mot|vate the emp|oyees |n |mp|ement|ng A8C An approprlaLe lncenLlve
scheme for boLh Lhe accounLlng personnel and Lhe people from oLher funcLlonal areas
(such as markeLlng deslgn and englneerlng and producLlon) should be formulaLed 1he
goal should be Lo obLaln Lhe cooperaLlon of employees for Lhe lmplemenLaLlon of A8C ln
manufacLurlng




WCkkS CI1LD
A Cunasekaran M S (1988) lmplemenLaLlon of acLlvlLybased cosLlng ln manufacLurlng lotetootloool Iootool of
ltoJoctloo cooomlcs
Cunasekaran A Slngh (1999) SlCn Cl AC1lvl1?8AS CCS1lnC ln A SMALL CCMAn? A CAS S1u?
ltoceeJloqs of tbe 24tb lotetootloool coofeteoce oo compotets ooJ loJosttlol oqloeetloq
8oLch W (1990) AcLlvlLy based cosLlng ln servlce lndusLrles Iootool of cost Moooqemeot
SLapleLon aLl S 8each !ulmanlchoLl (2004) AcLlvlLybased cosLlng for loglsLlcs and
markeLlng 8osloess ltocess Moooqemeot 10 (3) 384397
8aykasoglu Akaplanoglu v2006b AppllcaLlon of buslness process modellng and slmulaLlon Lo a
loglsLlcs company AM506 lotetootloool coofeteoce oo MoJelloq ooJ 5lmolotloo 2830 AugusL 2006
konya 1urkey pp977982
8aykasoglu Akaplanoglu v 2008 AppllcaLlon of acLlvlLybased cosLlng Lo a land LransporLaLlon
company A case sLudy lotetootloool Iootool of ltoJoctloo cooomlcs