International Journal of Economics, Finance and Management Sciences

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Integration of Activity-Based Budgeting and Activity-Based Management

Received: 19 June 2013    Accepted:     Published: 10 August 2013
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Abstract

Activity-Based Costing (ABC)/Activity-Based Management (ABM) was developed in the mid 1980s by Kaplan and it has been applied very popular in developed countries with obvious advantages. Although ABC system has more advantages than traditional systems, but in today’s competitive economic environment it has not met fulfilled provision of sufficient information for decision-making. The ABC/ABM system alone, however, lacks the ability to support information for managerial decisions. We can summary the limitations of single ABC in today’s business environment as follow: (1) ABC was originally developed because traditional costing appeared to be providing misleading product costs. Only single ABC using, it just provides an alternative way to trace costs to products, (2) lack of planning and control cost. ABC/ABM discusses a product has already been developed, has been incurred costs, and is ready to be marketed as soon as a price set, (3) limit in finding opportunities for innovation, (4) lack of support for short-term decision. How can we overcome these limitations of ABC/ABM? This paper draws the framework of integration of ABC/ABM with other management accounting methods as one way to overcome its limitation and innovation management accounting. In the cope of this paper, authors focus on one model in the framework that is the integration of ABB with ABM.

DOI 10.11648/j.ijefm.20130104.11
Published in International Journal of Economics, Finance and Management Sciences (Volume 1, Issue 4, August 2013)
Page(s) 181-187
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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), 2024. Published by Science Publishing Group

Keywords

Integration, Activity-Based Management (ABM), Activity-Based Budgeting (ABB)

References
[1] Atkinson, A.A., Kaplan, R.S., Matsumura, E.M. and Young, 2008. Management Accounting, Peking: Tsinghua University Press
[2] Akyol, D.E., Tuncel, G. and Bayhan, G.M., 2005. A Comparative Analysis of Activity-Based Costing and Traditional Costing. World Academy of Science, Engineering and Technology, 3, 44-47
[3] Baird, K., 2007. Adoption of activity management practices in public sector organizations. Accounting and Finance, 47, 551-569
[4] Chen, G.M., Firth, M. and Park, K., 1993. The implementation and benefits of activity-based costing: a Hong Kong study. Asian Review of Accounting, 9(2), 23-37
[5] Chiadamrong., 2003. Integrating ABC and EVA to evaluate investment decisions, ASEAN Journal Science and Technology Development (AJSTD), 20(1), 87-95
[6] Chongruksut,. W. and Brooks, A., 1993. The adoption and implementation of Activity-Based Costing in Thailand. Asian Review of Accounting, 13(2), 1-17
[7] Cohen, S., Venieris, G. and Kaimenaki, E., 2005. ABC: adopters, supporters, deniers and unawares. Managerial Auditing Journal, 20(9), 981-1000.
[8] Cooper, R. and Kaplan, R.S., 1991. Profit priorities from activity-based costing. Harvard Business Review, May-June, 130-135.
[9] Gunther Friedl, Hans-Ulrich Kupper, Burkhard Pedell., 2005. Relevance Added: Combining ABC with German Cost Accounting. Strategic Finance, 6, 56-61
[10] Hansen, D.R. and Mowen, M.M., 2003. Cost management: Accounting and Control. Peking, Peking University Press.
[11] Hilton, Ronald W., 2002. Managerial accounting: creating value in a dynamic business environment (5th Ed), China Machine Press.
[12] Hixon, M., 1995. Activity-based management: its purpose and benefit. Management Accounting, June.
[13] Horngren, C.T., Sundem, G.L. and Stratton, W.O., 2007. Introduction to management accounting. Peking, Peking University Press.
[14] Innes, J. and Mitchell, F., 2000. Activity-Based Costing in The U.K.’S Largest Companies: A Comparison of 1994 And 1999 Survey Results. Management Accounting Research, 11, 349–362
[15] Kaplan, R.S. and Atkinson, A.A., 1998. Advanced Management Accounting. Prentice Hall International, Inc.
[16] Lewis, L.D., 1992. Activity-Based Costing: A tool for management. Central Business Review, 11(2), 28-30.
[17] Lim. A., 2001. The importance of activity based costing / management to the balanced scorecard, Available at: www.apmss.com.sg/pdf/importanceof-abcinbsc.pdf.
[18] 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
[19] Matthew, J, Miller, T., 1998. A framework for integrating activity-based costing and balanced scorecard into the logistics strategy development and monitoring process. Journal of Business Logistics, 19, 131-138
[20] Mohamed M. El Gibaly and Ahmed Abdelnaby Ahmed Diab., 2012. A model to integrate of the ABC and the BSC in the Egyptian companies: Aligning strategic efficiency and performance improvement (Field study). Journal of American Science, 8(6), 543-554
[21] 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.
[22] Qayoumi, M.H., 1996. Using activity-based management as a vehicle for managing change. Facilities Manager, 12(1), 28-32
[23] Roztocki, N., & Needy, K. L., 1999. Integrating Activity-Based Costing and Economic Value Added in Manufacturing. Engineering Management Journal, 11(2), 17-22.
[24] Tandung Huynh, Guangming Gong, Anhtuan Nguyen., 2013. Integrating activity-based costing with economic value added. Journal of Investment and Management, 2(3), 34-40
[25] Turney, P.B., 2005. Linking ABC/M and the balanced scorecard. Cost Technology Inc. Available at: http://www.dc349.4shared.com/doc/uoRZLivj/preview.html
[26] Wilbur I. Smith, Gabrielle Lewis, Tremika Churchwell, and Colin Benjamin., 2002. Integrating Activity-Based Costing, Target Costing, And Value Engineering For Supply Chain Improvement, 447-452 http://ieeexplore.ieee.org/xpls/abs_all.jsp?arnumber=1049479&tag=1.html
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Author Information
  • Business School, Hunan University, Hunan, China, Faculty of Accounting and Auditing in Industrial University, Hochiminh City, Vietnam

  • Business School, Hunan University, Hunan, China

  • Faculty of Accounting and Auditing in Industrial University, Hochiminh City, Vietnam

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  • APA Style

    Tandung Huynh, Guangming Gong, Huyhanh Huynh. (2013). Integration of Activity-Based Budgeting and Activity-Based Management. International Journal of Economics, Finance and Management Sciences, 1(4), 181-187. https://doi.org/10.11648/j.ijefm.20130104.11

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    ACS Style

    Tandung Huynh; Guangming Gong; Huyhanh Huynh. Integration of Activity-Based Budgeting and Activity-Based Management. Int. J. Econ. Finance Manag. Sci. 2013, 1(4), 181-187. doi: 10.11648/j.ijefm.20130104.11

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    AMA Style

    Tandung Huynh, Guangming Gong, Huyhanh Huynh. Integration of Activity-Based Budgeting and Activity-Based Management. Int J Econ Finance Manag Sci. 2013;1(4):181-187. doi: 10.11648/j.ijefm.20130104.11

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  • @article{10.11648/j.ijefm.20130104.11,
      author = {Tandung Huynh and Guangming Gong and Huyhanh Huynh},
      title = {Integration of Activity-Based Budgeting and Activity-Based Management},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {1},
      number = {4},
      pages = {181-187},
      doi = {10.11648/j.ijefm.20130104.11},
      url = {https://doi.org/10.11648/j.ijefm.20130104.11},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijefm.20130104.11},
      abstract = {Activity-Based Costing (ABC)/Activity-Based Management (ABM) was developed in the mid 1980s by Kaplan and it has been applied very popular in developed countries with obvious advantages. Although ABC system has more advantages than traditional systems, but in today’s competitive economic environment it has not met fulfilled provision of sufficient information for decision-making. The ABC/ABM system alone, however, lacks the ability to support information for managerial decisions. We can summary the limitations of single ABC in today’s business environment as follow: (1) ABC was originally developed because traditional costing appeared to be providing misleading product costs. Only single ABC using, it just provides an alternative way to trace costs to products, (2) lack of planning and control cost. ABC/ABM discusses a product has already been developed, has been incurred costs, and is ready to be marketed as soon as a price set, (3) limit in finding opportunities for innovation, (4) lack of support for short-term decision. How can we overcome these limitations of ABC/ABM? This paper draws the framework of integration of ABC/ABM with other management accounting methods as one way to overcome its limitation and innovation management accounting. In the cope of this paper, authors focus on one model in the framework that is the integration of ABB with ABM.},
     year = {2013}
    }
    

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  • TY  - JOUR
    T1  - Integration of Activity-Based Budgeting and Activity-Based Management
    AU  - Tandung Huynh
    AU  - Guangming Gong
    AU  - Huyhanh Huynh
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    N1  - https://doi.org/10.11648/j.ijefm.20130104.11
    DO  - 10.11648/j.ijefm.20130104.11
    T2  - International Journal of Economics, Finance and Management Sciences
    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
    SP  - 181
    EP  - 187
    PB  - Science Publishing Group
    SN  - 2326-9561
    UR  - https://doi.org/10.11648/j.ijefm.20130104.11
    AB  - Activity-Based Costing (ABC)/Activity-Based Management (ABM) was developed in the mid 1980s by Kaplan and it has been applied very popular in developed countries with obvious advantages. Although ABC system has more advantages than traditional systems, but in today’s competitive economic environment it has not met fulfilled provision of sufficient information for decision-making. The ABC/ABM system alone, however, lacks the ability to support information for managerial decisions. We can summary the limitations of single ABC in today’s business environment as follow: (1) ABC was originally developed because traditional costing appeared to be providing misleading product costs. Only single ABC using, it just provides an alternative way to trace costs to products, (2) lack of planning and control cost. ABC/ABM discusses a product has already been developed, has been incurred costs, and is ready to be marketed as soon as a price set, (3) limit in finding opportunities for innovation, (4) lack of support for short-term decision. How can we overcome these limitations of ABC/ABM? This paper draws the framework of integration of ABC/ABM with other management accounting methods as one way to overcome its limitation and innovation management accounting. In the cope of this paper, authors focus on one model in the framework that is the integration of ABB with ABM.
    VL  - 1
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    ER  - 

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