Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises

Tandung Huynh; Guangming Gong; Ngocminh Ngo

doi:doi:10.11648/j.ijber.20130203.13

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Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises

Tandung Huynh, Guangming Gong, Ngocminh Ngo

Published in International Journal of Business and Economics Research (Volume 2, Issue 3)

Received: 29 May 2013 Published: 10 June 2013

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Abstract

Traditional costing (TDC) has been used many decades and very popular with organizations because it is simple and inexpensive. In today’s business environment, overhead cost has a significant proportion in total cost, using TDC for assigning overhead cost lead to inaccuracy of product cost. Activity-Based Costing (ABC), until now, is considered as a modern costing method that overcomes the limitations of TDC and it has been popular in developed countries. However, it is until new method in developing countries, so it needs to be more diffused in this countries.This paper conducted the project on ABC method in Van Chinh enterprise in Vietnam. We defined ten activities centers as shown in table 4. Then, we applied ABC method to calculate cost of products and compared with the results calculated by TDC method. This paper concluded that ABC method is practical and appropriate for such a Van Chinh enterprise and provides more accurate information for cost management and management decision-making.

Published in	International Journal of Business and Economics Research (Volume 2, Issue 3)
DOI	10.11648/j.ijber.20130203.13
Page(s)	59-68
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2013. Published by Science Publishing Group

Keywords

Activity-Based Costing (ABC), Traditional Costing (TDC), Vietnam, Van Chinh Enterprise, Cost Analysis, Small and Medium Enterprises

References

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[2]	Chongruksut,. W. and Brooks, A., 1993. The adoption and implementation of Activity-Based Costing in Thailand. Asian Review of Accounting, 13(2), 1-17.
[3]	Cohen, S., Venieris, G. and Kaimenaki, E., 2005. ABC: adopters, supporters, deniers and unawares. Managerial Auditing Journal, 20(9), 981-1000.
[4]	Hansen, D.R. and Mowen, M.M., 2003. Cost Management: Accounting and Control. Peking: Peking University Press.
[5]	Horngren, Charles T., Sundem Gary L., Stratton William O. Introduction to management accounting. Peking University Press, 2007.
[6]	Kaplan, R.S. and Atkinson, A.A., 1998. Advanced Management Accounting. Prentice Hall International, Inc.
[7]	Kaplan, R.S. and Anderson, S., 2004. Time-Driven Activity-Based costing. Harvard Business Review, 2004, November, 1-9.
[8]	Kevin Baird, 2007. Adoption of activity management practices in public sector organizations, Accounting and Finance, 47, 551-569.
[9]	Khozein, A. and Dankoob, M., 2011. Activity Based Costing System and its succeed implementing in organizations. Australian Journal of Basic and Applied Sciences, 2011, 5(10), 613-619.
[10]	Krumwiede, K.R., 1998. ABC: Why it's tried and how it succeeds. Management Accounting, April: 32-38.
[11]	Liu, L.Y.J. and Pan, F., 2007. The implementation of Activity-Based Costing in China: An innovation action research approach. The British Accounting Review, 39, 249-264.
[12]	Nassar, M., Al-Khadash, H.A. and Sangster, A., 2011. The diffusion of activity-based costing in Jordanian industrial companies. Qualitative Research in Accounting & Management, 8(2), 180-200.
[13]	Zhang, Y.F. and Isa, C.R., 2010. Behavioral and organizational variables affecting the success of ABC success in China. African Journal of Business Management, 4(11), 2302-2308.
[14]	Tandung Huynh, Gong Guang Ming, Tran Phuoc, 2013. So sánh phương pháp ABC và phương pháp tính giá truyền thống – sự cần thiết áp dụng phương pháp ABC cho các doang nghiệp Việt Nam. Tạp chí Đại Học Công Nghiệp thành phố Hồ Chí Minh, 10(1), 58-70. (Tandung Huynh, Gong Guang Ming, Tran Phuoc, 2013. A comparative analysis of Activity-Based Costing and traditional costing, the necessary to apply ABC in Vietnamese companies. Journal of Ho Chi Minh City University of Industry, 10(1), 58-70).
[15]	Trương Bá Thanh, Đinh Thị Thanh Hường, 2009. Vận dụng phương pháp tính giá dựa trên cơ sở hoạt động trong các doanh nghiệp in. Tạp chí khoa học và công nghệ, đại học Đà Nẵng, 3(32), 1-10. (Truong, B.T. and Dinh, T.H., 2009. Apply ABC method in the printing enterprise. Journal of Da Nang Science and Technology, 3(32), 1-10).

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APA Style

Tandung Huynh, Guangming Gong, Ngocminh Ngo. (2013). Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises. International Journal of Business and Economics Research, 2(3), 59-68. https://doi.org/10.11648/j.ijber.20130203.13

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ACS Style

Tandung Huynh; Guangming Gong; Ngocminh Ngo. Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises. Int. J. Bus. Econ. Res. 2013, 2(3), 59-68. doi: 10.11648/j.ijber.20130203.13

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AMA Style

Tandung Huynh, Guangming Gong, Ngocminh Ngo. Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises. Int J Bus Econ Res. 2013;2(3):59-68. doi: 10.11648/j.ijber.20130203.13

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@article{10.11648/j.ijber.20130203.13,
  author = {Tandung Huynh and Guangming Gong and Ngocminh Ngo},
  title = {Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises},
  journal = {International Journal of Business and Economics Research},
  volume = {2},
  number = {3},
  pages = {59-68},
  doi = {10.11648/j.ijber.20130203.13},
  url = {https://doi.org/10.11648/j.ijber.20130203.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20130203.13},
  abstract = {Traditional costing (TDC) has been used many decades and very popular with organizations because it is simple and inexpensive. In today’s business environment, overhead cost has a significant proportion in total cost, using TDC for assigning overhead cost lead to inaccuracy of product cost. Activity-Based Costing (ABC), until now, is considered as a modern costing method that overcomes the limitations of TDC and it has been popular in developed countries. However, it is until new method in developing countries, so it needs to be more diffused in this countries.This paper conducted the project on ABC method in Van Chinh enterprise in Vietnam. We defined ten activities centers as shown in table 4. Then, we applied ABC method to calculate cost of products and compared with the results calculated by TDC method. This paper concluded that ABC method is practical and appropriate for such a Van Chinh enterprise and provides more accurate information for cost management and management decision-making.},
 year = {2013}
}

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TY  - JOUR
T1  - Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises
AU  - Tandung Huynh
AU  - Guangming Gong
AU  - Ngocminh Ngo
Y1  - 2013/06/10
PY  - 2013
N1  - https://doi.org/10.11648/j.ijber.20130203.13
DO  - 10.11648/j.ijber.20130203.13
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 59
EP  - 68
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20130203.13
AB  - Traditional costing (TDC) has been used many decades and very popular with organizations because it is simple and inexpensive. In today’s business environment, overhead cost has a significant proportion in total cost, using TDC for assigning overhead cost lead to inaccuracy of product cost. Activity-Based Costing (ABC), until now, is considered as a modern costing method that overcomes the limitations of TDC and it has been popular in developed countries. However, it is until new method in developing countries, so it needs to be more diffused in this countries.This paper conducted the project on ABC method in Van Chinh enterprise in Vietnam. We defined ten activities centers as shown in table 4. Then, we applied ABC method to calculate cost of products and compared with the results calculated by TDC method. This paper concluded that ABC method is practical and appropriate for such a Van Chinh enterprise and provides more accurate information for cost management and management decision-making.
VL  - 2
IS  - 3
ER  -

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Author Information

Tandung Huynh

Business School, Hunan University, China, Faculty of Accounting and Auditing in Industrial University of Hochiminh City, Vietnam
Guangming Gong

Business School, Hunan University, China
Ngocminh Ngo

Business and Trade School, Hunan University, China, Faculty of Business Administration in Industrial University of Hochiminh City, Vietnam

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Plain Text BibTeX RIS

APA Style

Tandung Huynh, Guangming Gong, Ngocminh Ngo. (2013). Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises. International Journal of Business and Economics Research, 2(3), 59-68. https://doi.org/10.11648/j.ijber.20130203.13

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ACS Style

Tandung Huynh; Guangming Gong; Ngocminh Ngo. Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises. Int. J. Bus. Econ. Res. 2013, 2(3), 59-68. doi: 10.11648/j.ijber.20130203.13

Copy | Download

AMA Style

Tandung Huynh, Guangming Gong, Ngocminh Ngo. Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises. Int J Bus Econ Res. 2013;2(3):59-68. doi: 10.11648/j.ijber.20130203.13

Copy | Download

@article{10.11648/j.ijber.20130203.13,
  author = {Tandung Huynh and Guangming Gong and Ngocminh Ngo},
  title = {Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises},
  journal = {International Journal of Business and Economics Research},
  volume = {2},
  number = {3},
  pages = {59-68},
  doi = {10.11648/j.ijber.20130203.13},
  url = {https://doi.org/10.11648/j.ijber.20130203.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20130203.13},
  abstract = {Traditional costing (TDC) has been used many decades and very popular with organizations because it is simple and inexpensive. In today’s business environment, overhead cost has a significant proportion in total cost, using TDC for assigning overhead cost lead to inaccuracy of product cost. Activity-Based Costing (ABC), until now, is considered as a modern costing method that overcomes the limitations of TDC and it has been popular in developed countries. However, it is until new method in developing countries, so it needs to be more diffused in this countries.This paper conducted the project on ABC method in Van Chinh enterprise in Vietnam. We defined ten activities centers as shown in table 4. Then, we applied ABC method to calculate cost of products and compared with the results calculated by TDC method. This paper concluded that ABC method is practical and appropriate for such a Van Chinh enterprise and provides more accurate information for cost management and management decision-making.},
 year = {2013}
}

Copy | Download

TY  - JOUR
T1  - Apply Activity-Based Costing to Calculate Product Cost in Small and Medium Enterprises
AU  - Tandung Huynh
AU  - Guangming Gong
AU  - Ngocminh Ngo
Y1  - 2013/06/10
PY  - 2013
N1  - https://doi.org/10.11648/j.ijber.20130203.13
DO  - 10.11648/j.ijber.20130203.13
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 59
EP  - 68
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20130203.13
AB  - Traditional costing (TDC) has been used many decades and very popular with organizations because it is simple and inexpensive. In today’s business environment, overhead cost has a significant proportion in total cost, using TDC for assigning overhead cost lead to inaccuracy of product cost. Activity-Based Costing (ABC), until now, is considered as a modern costing method that overcomes the limitations of TDC and it has been popular in developed countries. However, it is until new method in developing countries, so it needs to be more diffused in this countries.This paper conducted the project on ABC method in Van Chinh enterprise in Vietnam. We defined ten activities centers as shown in table 4. Then, we applied ABC method to calculate cost of products and compared with the results calculated by TDC method. This paper concluded that ABC method is practical and appropriate for such a Van Chinh enterprise and provides more accurate information for cost management and management decision-making.
VL  - 2
IS  - 3
ER  -

Copy | Download