Activity-based costing as a method for assessing the economics of modularization: a case study and beyond

Jesper Thyssen, Poul Israelsen, Brian Jørgensen

    Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

    56 Citationer (Scopus)

    Abstract

    The paper accounts for an Activity-Based Costing (ABC) analysis supporting decision-making concerning product modularity. The ABC analysis carried out is communicated to decision-makers by telling how much higher the variable cost of the multi-purpose module can be compared to the average variable cost for the product-unique modules that it substitutes to break even in total cost. The analysis provides the platform for stating three general rules of cost efficiency of modularization, which in combination identify the highest profit potential of product modularization. Finally the analysis points to problems of using ABC in costing modularity, i.e. handling of R&D costs and identification of product profitability upon an enhanced modularization.
    OriginalsprogEngelsk
    TidsskriftInternational Journal of Production Economics
    Vol/bind103
    Udgave nummer1
    Sider (fra-til)252-270
    Antal sider19
    ISSN0925-5273
    DOI
    StatusUdgivet - 1 sep. 2006

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