Accession Number : ADA334398

Title :   Development of Activity Based Costing (ABC) Optimization Tool for an Environmental Organization

Descriptive Note : Master's thesis

Corporate Author : AIR FORCE INST OF TECH WRIGHT-PATTERSONAFB OH

Personal Author(s) : Gutterman, Anthony J.

PDF Url : ADA334398

Report Date : DEC 1997

Pagination or Media Count : 167

Abstract : The purpose of this thesis was to develop a tool that would allow the user the ability to determine the activities an organization should track using Activity Based Costing (ABC). This was accomplished through the assignment of costs to the maintenance of ABC data and the determination of the benefit received as a result of using ABC. While obtaining the information pertinent to the cost of ABC was relatively straightforward and well documented, the information regarding the value of the benefit of ABC was not available. Therefore, using information provided in the literature concerning savings resulting from making the polluter pay for the amount of pollution generated, a benefit ratio was established based on the idea that when an organization is given both the financial ability and responsibility to pay for its actions, savings will immediately occur. Current tools and techniques available in the ABC literature concerning the cost and benefit of ABC focus on the development of cost drivers. Nothing is available which focuses on the activities that should be used by an ABC system. This thesis expands the body of knowledge on ABC by developing such a tool. In addition, nothing currently is available which allows an ABC practitioner the ability to know what value of benefit must be received from ABC in order to recoup the financial investment involved in using such a system. Success stories have been written citing 10 to 100 times the investment gained as a result of using ABC, but this may or not be the case for every organization. This thesis fills the gap between hoping to receive a 10 or 100 times payback and knowing what the expected payback must be in order to use ABC beneficially (in terms of dollars invested).

Descriptors :   *FINANCIAL MANAGEMENT, *BUSINESS PROCESS REENGINEERING, *COST BENEFIT ANALYSIS, INVESTMENTS, COST ANALYSIS, THESES, COST MODELS, ENVIRONMENTAL MANAGEMENT, WASTE MANAGEMENT, POLLUTION ABATEMENT, PLANNING PROGRAMMING BUDGETING, PROFITS.

Subject Categories : Economics and Cost Analysis
      Administration and Management

Distribution Statement : APPROVED FOR PUBLIC RELEASE