Back in the late 80's and early 90's,  Japanese firms bought into Activity Based
Costing in a big way.  In ABC, all costs are allocated to the products according
to need, or hits, on administration and service centers, and charged to each
unit produced.  In this way, they can determine the exact cost of producing a
specific quantity of a  specific model.  They can also find areas of
administration that are not productive.  They can also find products or styles
of products that are not cost effective.

If we did this, ancient american history wouldn't be taught because the cost per
student would be so high.  The closest we get to this is in Cost Centers for
things like Computer Centers or Glass Blowing shops.

"Herbert B. Chermside" wrote:

> We are trying to do business with a Japanese firm.  Although I have not
> yewt met with them, the P.I. has.  They seem to have a problem with F&A,
> indirect, overhead, or whatever we name the general costs of doing
> business.  I cannot conceive it possible to operate a business, even in
> Japan, without using this concept, so we need to describe it in their terms.
> Does anyone out there have some familiarity with the techniques and terms
> used in Japan for this?  I think if we understand their culture in this
> regard, we can start singing from the same hymnbook!
>
> Thanks!!
>
> Chuck
>
> Herbert B. Chermside, CRA
> Director, Sponsored Programs
> Virginia Commonwealth University
>
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--
Greg Schmidt
Manager, Contract & Grant Accounting
Florida A&M University
201 FHAC
Tallahassee, FL  32307-3200

DUNS:  623751831

College of the Year - 1997

voice:   850 561-2956
fax:     850 561-2461

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 Instructions on how to use the RESADM-L Mailing List, including
 subscription information and a web-searchable archive, are available
 via our web site at http://www.hrinet.org (click on "Listserv Lists")
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