Excerpt from www.NDMA.COM, © 2024 N. Dean Meyer and Associates Inc.
Speech Abstract: Second-generation Cost Models
going beyond ABC, new product/service cost models improve accuracy and encourage entrepreneurship
Cost models assign all a department's costs to its products and services.
First-generation models, like activity-based costing, treat internal support services as "cost pools," introducing distortions exceeding 30 percent.
Second-generation models treat support services as internal "sales," improving accuracy, revealing cost savings, and improving support services.
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