Formalizing Product Cost Distortion : The Impact of Volume - Related Allocation Bases on Cost Information  

Oleh:

Jermias, Johny

Jenis: Article from Journal - ilmiah nasional - tidak terakreditasi DIKTI
Dalam koleksi: International Journal of Business vol. 5 no. 3 (Sep. 2003), page 381-400.
Topik: PRODUCT COSTING; activity - based costing; indirect costs; product cost distortions; size and volume diversity.

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: II51.2 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

The purpose of this study is formally analyze product cost distortions resulting from the process of allocating costs to products based on activity - based costing (ABC) and the conventional product costing systems. The model developed on this paper rigorously shows the impact of treating costs that are not volume related as if they are. The model demonstrates that the source of product cost distortion is the difference between the proportion of driver used by each product in ABC and the proportion of the based used by the same product in the conventional costing systems. The difference arises because the conventional costing systems ignore the existence arises because the conventional costing systems ignore the existence of batch - related and product - related costs. The model predicts a positive association between volume and size diversity with product cost distortions. When interaction between volume and size diversity exists, the distortion is either mititgated or exacerbated. The magnitude of the distortion is jointly determined by the size of the differences and the size of the total indirect costs.

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