Actually ABC is widely used in the USA as well, and AFAIK is generally
considered a far superior method of cost accounting. Its the opposite of
the notion of 'overhead' which tends, frankly, to lead to vague and
possibly bloated admin-type costs. Using overhead-type cost accounting,
costs can be hidden without anyone really knowing; nothing should be
managed that way. The point of ABC is to discover the true cost of every
product so that resources are concentrated on the most profitable ones,
while unprofitable or less profitable ones are trimmed back, dropped, or
whatever. ABC is very good at opening eyes!!!
---------------------- Forwarded by Daniel J. Egan/SSG/DLO/Wadsworth/DOH on
09/13/99 04:19 PM ---------------------------
Greg Schmidt <xxxxxx@FAMU.EDU> on 09/13/99 12:20:18 PM
Please respond to Research Administration Discussion List
<xxxxxx@hrinet.org>
To: xxxxxx@hrinet.org
cc: (bcc: Daniel J. Egan/SSG/DLO/Wadsworth/DOH)
Subject: Re: Japanese Business Practices
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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