Profit linked productivity measurement

Assessing the effects of productivity changes on current profits is one way to value productivity changes. Profits change from the base per...

Total productivity measurement

Measuring productivity for all inputs at once is called total productivity measurement. In practice, it may not be necessary to measure the...

Partial productivity measurement defined

Productivity of a single input is typically measured by calculating the ratio of the outputto the input as follows:   Productivity ratio=...

Reporting quality costs

A quality cost reporting system is essential if an organization is serious about improving and controlling quality costs. The first and sim...

Quality cost measurement

Quality costs can also be classified as observable or hidden. Observable quality costs are those that are available from an organization’s ...

Defining quality costs

Quality-linked activities are those activities performed because poor quality may or does exist. The costs of performing these activities a...

The meaning of quality

Quality is often referred to as the “degree or grade of excellence”; thus, it is a relative measure of goodness. Defining quality as goodne...

Implementing activity based management

Activity-based management (ABM) is a more comprehensive system than an ABC system. ABM adds a process view to the cost view of ABC. ABM enc...

Activity capacity management

Activity capacity is the number of times an activity can be performed. Activity drivers measure activity capacity. For example, consider in...

Activity flexible budgeting

The ability to identify changes in activity costs as activity output changes allows managers to more carefully plan and monitor activity im...

Reporting value and non value added costs

Reducing non-value-added costs is one way to increase activity efficiency. A company’s accounting system should distinguish between value...

Role of target costing

Life-cycle cost management emphasizes cost reduction, not cost control. Target costing becomes a particularly useful tool for establishing ...

Interactive viewpoint

All three life-cycle viewpoints offer insights that can be useful to producers of goods and services. In fact, producers cannot afford to i...

Product life cycle viewpoints

Product life cycle is simply the time a product exists from conception to abandonment. Usually product life cycle refers to a product class...

Internal linkage analysis an example

To provide a more concrete foundation for the internal linkage concepts, let’s consider a specific numerical example. Assume that a firm pr...

Value-chain analysis exploiting internal linkages

Value-chain analysis is identifying and exploiting internal and external linkages with the objective of strengthening a firm’s strategic po...

Operational activities and drivers

Operational activities are day-to-day activities performed as a result of the structure and processes selected by the organization. Example...

Organizational activities and cost drivers

Organizational activities are of two types: structural and executional. Structural activitiesare activities that determine the underlying e...

The key to creating and sustaining a competitive advantage

Strategic Positioning: Competitive advantage is creating better customer value for the same or lower cost than offered by competitors or cr...