Activity-Based Costing for Small and Mid-Sized Businesses: An Implementation Guide (Wiley professional paperback series) [Paperback]

Douglas T. Hicks (Author)

Book Description

Publication Date: July 15, 1997 | ISBN-10: 0471196274 | ISBN-13: 978-0471196273

The ABCs of competition

Activity-Based Costing for Small and Mid-Sized Businesses leaves the theorizing to think tanks and provides practical methods that help you gain a competitive advantage through greater understanding of your product and process costs. It shows you how your company can adopt ABC in a practical, cost-effective way without dismantling your current cost information systems.

By following the steps outlined in this book, you'll gain the benefits of accurate and relevant cost information, because, unlike many other books on this subject, Activity-Based Costing for Small and Mid-Sized Businesses is written by a practicing accountant, not an industrial engineer or an academic. Douglas T. Hicks shows you how to use an approach he developed while solving problems for real small and mid-sized companies. He helps you sharpen your competitive edge with:

• A unique, proven method for developing and visualizing cost flows
• A spreadsheet model blueprint with data flows
• An ongoing case study to document the model-building process
• A special chapter dedicated to service businesses
• An entire section describing how ABC can be used to improve your overall decision support system

For controllers, cost accountants, owners and managers of small and mid-sized companies, this book offers a proven, practical alternative to the complex, high-cost ABC being promoted by others. It helps CPAs increase service to their clients and boost revenues for their firms. This method also allows educators to incorporate ABC into existing cost accounting courses.

Editorial Reviews

From the Publisher

Provides a much-needed alternative to the ``big guys'' approach to activity-based costing (ABC). Divided into 3 sections, it begins by addressing some of the general issues regarding ABC at small and mid-sized companies, featuring key concepts needed to implement ABC. Part 2 outlines the steps necessary to establish an activity-based system including how to develop an effective cost flow pattern, the tools used in this procedure, a process for planning a cost model and an outline for gathering the data required to drive it. Finally it explains how the activity-based cost accumulation model, developed in the previous section, can be used to improve a company's decision making process and demonstrates how a business can create cost estimates and evaluate pricing strategies for multi-year programs. --This text refers to an out of print or unavailable edition of this title.

From the Inside Flap

Looking for a practical, proven method to gain that crucial competitive edge for your company? It’s as simple as ABC. Activity-based costing (ABC) is a decision support tool that gives you that needed edge through a greater understanding of your product and process costs. In Activity-Based Costing: Making It Work for Small and Mid-Sized Companies, practicing accountant Douglas T. Hicks guides you through the process of adopting ABC and using it to improve the quality of your business’s decisions. Traditionally, cost accounting methods have been designed to determine the inventory value and cost of sales for an entire organization—seldom providing accurate or relevant information for individual products or services. However, with ABC, businesses can now see dramatic improvements in both accuracy and relevance when measuring product and process costs. Decisions based on this improved cost information will guide the business to an improved competitive position, both domestically and globally. If your company has between twenty and five hundred employees, it can greatly benefit from ABC without an overhaul of its current cost information systems. Using an approach developed while solving problems for small and midsized companies, Douglas Hicks helps you sharpen your competitive edge while emphasizing the "total package" of cost information—not just its computational aspects—and steers you clear of the dangers encountered by measuring costs using generally accepted accounting principles. The result is a reader-accessible, comprehensive narrative covering every ABC element, including clearly defined instructions for building a cost accumulation and distribution model for any size business. In this indispensable reference, Mr. Hicks discusses the logic of ABC and its cost flow-down steps, then clearly demonstrates the most appropriate ways for your business to change to multiple costing rates and bases. The ABC system is used to perform "what if" analyses, while several case studies are presented on developing cost flowdown structures. And by simply outlining the relationship between decision costing and long-term contracts, he easily illustrates which small and mid-sized businesses can benefit the most from ABC. Owners, managers, controllers, accountants, and any executive involved with small and mid-sized companies will appreciate this book’s practical, down-to-earth ABC methods. Its tested and proven theories and methods will help businesses of any size profit, by basing their decisions on facts, not fantasies. Activity-based costing is no longer an option when striving for the competitive edge in business—it is now a requirement. Even educators will find ways to incorporate ABC into existing cost accounting courses with this insightful and timely book. --This text refers to an out of print or unavailable edition of this title.

See all Editorial Reviews

Product Details

• Paperback: 328 pages
• Publisher: Wiley (July 15, 1997)
• Language: English
• ISBN-10: 0471196274
• ISBN-13: 978-0471196273
• Product Dimensions: 9.2 x 6.1 x 0.8 inches
• Shipping Weight: 1 pounds
• Average Customer Review: 4.9 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #6,937,254 in Books (See Top 100 in Books)

More About the Author

Douglas T. Hicks, CPA, CMC has been helping business decision makers overcome the value-siphoning effects of traditional accounting information for nearly a quarter century. As a hands-on practitioner, he has helped over 200 businesses develop valid economic cost models that help them make better informed and, as a result, more profitable business decisions. His down-to-earth, from-the-trenches perspective differentiates his writings and presentations from others in the field.

Doug is an active member of the Institute of Management Accountants, the Michigan Association of CPAs and Institute of Management Consultants. He has been a featured speaker at six IMA National Conferences and in 1998 was selected as the group's "Instructor of the Year."

You can learn more about Doug and his activities at his webiste: www.dthicksco.com

Customer Reviews

Most Helpful Customer Reviews

16 of 16 people found the following review helpful:

4.0 out of 5 stars Very detailed, October 24, 2002

By 

Arthur Keen - See all my reviews

This review is from: Activity-Based Costing: Making It Work for Small and Mid-Sized Companies (Wiley Cost Management Series) (Paperback)

Hicks has a lot to offer in this book on activity-based costing, however it is not an easy to read. It very quickly dives into the weeds of detail. I think this is a very good second book to read on Activity Based Costing, because it goes into the details of how to actually implement a system. I would recommend that you first read Kaplan's "Cost and Effect," to get a good grounding in the fundamentals before reading this book.

13 of 13 people found the following review helpful:

5.0 out of 5 stars a powerful book for small businesses making pricing decision, July 5, 1999

By A Customer

This review is from: Activity-Based Costing: Making it Work for Small and Mid-Sized Companies (Hardcover)

This is one of the most useful books I have ever read for assisting small businesses in making product and pricing decisions. As a CPA who works with many small businesses, including many manfucturers, this book provides a cost effective way to implement activity based costing for small and medium sized businesses that does not cost thousands of dollars in software and consultant fees. It presents a practical method for determining product costs and providing information that any small company can use to make pricing and costing decisions, what-if analysis, and evaluating profit strategies. This type of information has traditionally been lacking for the small to medium size company. I would strongly recommend this book for any small to medium size business and the financial advisor who works with small to medium size businesses wishing to truly improve the business decision making tools available to them.

12 of 12 people found the following review helpful:

5.0 out of 5 stars Literally breaks ground!, February 25, 2000

By 

Bleda Arcað (Ankara, Turkey.) - See all my reviews

This review is from: Activity-Based Costing: Making it Work for Small and Mid-Sized Companies (Hardcover)

I can not quite imagine a single decision made in any company that does not concern cost. And, when it is about accurate costing, I can not imagine another book on business that can better assist than this one.

First, the author defines the concept, states the reasons why Activity Based Costing should be implemented in every company, and then thoroughly shows you how to do it. Since the main step-by-step example in the book concentrates on a small manufacturing organization, those who are applying the concept to service organizations may have a harder time making the translation to their specific situations. Still, I don't think that will be much of an issue. The book is very well-written and must be digested by every professional with a passion for improving their company and seize a competitive advantage.