Archive for August, 2009

Incremental progress is better than delayed, or unattained, perfection

Wednesday, August 12th, 2009

This is an old saying that keeps on coming back to my mind every now and then. This is because there are discussions going on Activity Based Costing (ABC) lately. These discussions are happening in person, workshops, networking sites on the Internet. The talks are about the results that it provides and the requirement of data for creating and maintaining the ABC models. It is now well known to the people that having an ABC system would provide a better understanding of the costs and hence the profitability of the products or customers. But at the same time they are worried about the efforts that they have to put to collect the data.

It is true that, this requires some efforts to create the model in your organization, but it is not to the extent that is cannot be managed.

Some of the statements are like

  • “Do we have now perform the time study using a stop watch for all the departments?”
  • “Do we have to enter activities for which the expense has happened, like we enter the cost center?”
  • “Do we have to change the chart of accounts?”