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Relevance Lost through ABC: A Case Study at Ericsson Mobile Comunications AB in Linköping
Linköping University, Department of Management and Economics.
Linköping University, Department of Management and Economics.
2000 (English)Independent thesis Advanced level (degree of Magister)Student thesis
Abstract [en]

During the last decade, Activity-Based Costing (ABC) has been recognized as a means to obtain more accurate and relevant information of product cost. Consultants have tried using the ABC concept as leverage for new projects, representatives from companies have attended seminars, and articles have been written on the theoretical foundations, the empirical justification, and on the implementation process. However, little progress seems to have been made despite of these activities. The question, whether ABC is the solution to the “Relevance Lost” or not, still remains to be answered. The research is based on a case study of an Ericsson company that has introduced Activity-Based Costing model for product costing. The purpose is to provide a critical evaluation and analysis of the existing model and to discuss how to “regain the relevance” of product costing through ABC. The study is conducted by interviewing relevant persons who are responsible for costing model and production process at Ericsson Mobile Communications AB in Linköping (ECS). Relevant documents during the implementation of ABC model have also been examined. Despite of a logical ABC model within ECS, the accuracy of cost information has not been improved. Many factors have been forgotten. Keeping costing model update, relating managers’ responsibility to activities performed and taking the cost of unused capacity into account are several examples. The study shows that ABCis not and will not be, however, the solution to the aging traditional product costing unless one uses it properly.

Place, publisher, year, edition, pages
Ekonomiska institutionen , 2000. , 65 p.
Master Thesis in Business Administration (Magisteruppsats från Ekonomprogrammet), 2000:18
Keyword [en]
Business and economics, Activity-Based Costing (ABC), allocation, causality, cost driver, Ericsson AB, management accounting, product costing, relevance lost.
Keyword [sv]
National Category
Economics and Business
URN: urn:nbn:se:liu:diva-668OAI: diva2:21939
Available from: 2000-07-05 Created: 2000-07-05

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