Activity-based costing and managment in the composites product realization process
by Vistas P. Karbhari, Scott K. Jones
International Journal of Materials and Product Technology (IJMPT), Vol. 7, No. 3, 1992

Abstract: The realisation of products from composite materials has long been recognized as an engineering challenge. Traditional methods of assigning costs to products during manufacture or predicting costs during design involve the use of accounting methods largely rooted in the role of external reporting. Accordingly the cost information available to design teams was of limited value. In an effort to provide more timely and useful cost information to managers, new methods of viewing product cost are being developed, namely activity-based costing (ABC), and its extensions, activity based management (ABM). These evolving methods of identifying and controlling manufacturing cost give composite design teams a tool for understanding product cost during the initial identification of concepts, and production management teams an effective method of controlling production costs. They are highly suitable for the use in concurrent engineering environment and are in fact essential to the efficient functioning of rapid product development teams. Explicit attention to the application, customer preferences, and value-in-use of the product provides the design team with notion of how much a particular performance characteristic is valued by the customer. In this paper we discuss how the strategy is emphasized by ABM focuses on managing costs in composites design and manufacture while further differentiating the product through increased performance. Emphasis is put on the use of ABC as a means of ensuring the process modification and development is conducted at the appropriate product development stages.

Online publication date: Thu, 04-Nov-2010

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