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Evangelos Skandalis

on 11 May 2016

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Transcript of Checkmate

1. There were too many drivers.
2. No proper administration.
3. No proper usage
4. Unison in the first place.
5. High heterogeneous product mix
6. High fixed costs (85%)
Place: Colorado Springs
Purpose: More accurate information for pricing decision making

Chinese provisional bank branch
To beat foreign competition, reduce cost, increase management control
1. Lack of a clear business purpose about the implementation.
2. Lack of education about ABC.
3. Poor ABC model design.
4. Lack of participants.
5. Individual and organizational resistance to change.
6. Few outsourcers available
ABC Costing International Failed Cases
Ζησιμοπούλου Κάτια (887)
Κουζέλης Παναγιώτης (892)
Μπίμπιζα Ναταλία (897)

Σκανδάλης Ευάγγελος (904)
Ταβουλαρέα Μαρία (905)
Porblems with the old accounting system after the merger with PT

1. The engineers of the production department were never fond of it and never supported truly the implementation
2. Workers were not consulted during the implementation of the new strategic tool
3. The failure to discuss PMO (completion of time sheets in Excel)
4. The ABC system was oriented to the commercial areas, with the production department being its main feeder of data, escalating the existing mutual loathing of the two departments, the production and commercial.
Michigan USA
Increased internal needs for information and external competition

1. Plant managers found ABC too complicated to use compared to the previous system.

2. The ABC system used data from 1986, while it was ready at 1987 and they were outdated and unreliable.
3. The original plant of Pontiac that came up with the idea was “the least successful in terms of providing data”.
4. Incompatibility with existing costing systems.
5. The entire task’s uncertainty of success and the worker’s autonomy that was part of General Motor’s culture reduce the probability of adoption.
6. At the sole auto assembly plant the system failed miserably, since it produced one product and it was heavily labor oriented
7. The company had really centralized leadership.
8. The increasing competition pressured General Motors for cost reduction
9. General Motors used external advisors and experts, which hindered the timing of the System’s implementation.
The traditional system overestimated the costs of high-volume products and underestimated the costs of products with high production-complexity

1. Linkage to competitive strategies and quality improvement
2. Lack of support from senior management.
3. Linkage to performance evaluation and incentives.
4. Insufficient resources
5. Inadequate production management and inventory controls.

Internet sources:

Scientific sources:
• Sandra Cohen George Venieris Efrosini Kaimenaki, (2005),"ABC: adopters, supporters, deniers and unawares", Managerial Auditing Journal, Vol. 20 Iss 9 pp. 981 - 1000
• Shannon W. Anderson, “A framework for assessing cost management system changes: The case of Activity Based Costing implementation at General Motors, 1986-1993”, Research Support School of Business Administration, (March 1995)
• Kevin Baird, “Adoption of activity management practices in public sector organizations”, Accounting and Finance, (2007), Vol. 47, p551-569
• Rong-Ruey Duh, Thomas W. Lin, Wen-Ying Wang, Chao-Hsin Huang, “The design and implementation of activity-based costing: A case study of a Taiwanese textile company”, International Journal of Accounting and Information Management, (29 January 2009), Vol. 17, Issue 1, p. 27-52
• Craig A. Latshaw, Teresa M. Cortese-Danile. “Activity-Based Costing: Usage and Pitfalls”, Review of Business, (Winter 2002), p.30-32
• Liu L. Y.G. & Pan F., “The implementation of Activity Based Costing In China: An innovation action research approach”, The British Accounting Review, Vol. 39 (2007), pp.249-264
• Sohan A. S.& Chung W. W.C., "Activity based costing in manufacturing: two case studies on implementation", Integrated Manufacturing Systems, 9 March 1998, 137-147
• Manivannan Senthil Velmurugan, “The Success and Failure of Activity-Based Costing Systems”, Journal of Performance Management
• Landry, S. P., L. M. Wood and T. M. Lindquist, “Can ABC bring mixed results?”, Management Accounting, (March 1997), Vol. 28-30,p. 32-33.
• Abed Al-Nasser Abdullah and Wei Li, “Why did ABC fail at the Bank of China?”,Management Accounting Quarterly, (Spring 2008),Vol. 9, No. 3
• Lucas Makomane Taba ,”Measuring the Successful Implementation of Activity Based Costing (ABC) in the South African Post Office”, Mini Dissertation for the University of South Africa, (September 2005)
• Maria Major and Trevor Hopper , “Managers divided: Implementing ABC in a Portuguese telecommunications company”, Management Accounting Research, (2005), p. 205–229
• Hilton R., Maher M., Selto F., “Cost Management: Strategies for Business Decisions” (fourth edition) , McGraw – Hill Irwin

What is ABC?
public sector


private sector
The result was:

34.4% of public sector


41.9% of private sector

In addition to that adoption rates are for public Hospitals at 42.1%, Government business enterprises with 41.9%, Government agencies at 30.9% and Universities at 16.7%.
The current study focuses on four particular public sectors:
1.Goverment Agencies,
2.Goverment Business Enterprises,
But how do we evaluate the ABC?
- Structured questionnaires with multi-item measures (e.g. scale 1 to 5)

Factors to be examined:
1. Top management support
2. Competition
3. Training
4. Cross- department involvement
5. Resources
6. Information technology
7. Size of the company
8. Consultants


1. high level managers
2. lower level managers
3. the average employee who uses the system.
-Direct observation

academics or external consultants
A cost accounting method
It first assigns costs to activities and then to goods and services...
based on how much each good or service uses the activities.
The first step to ABC was made by G.E. in the early 60's.
However it turned out to be important after the 1960s because there was a change in the cost structure of many organizations.

Many companies tried to implement it especially after the 80's
The majority failed
Cases of failure
around 70%
Is the ABC in our company the right choice?
Does it satisfy our needs?
Was the implementation perfect, satisfactory or disappointing?
Could I have missed any problems during the implementation?
After all these failures, a manager, using the ABC, might wonder...
To avoid failure and the mistakes of the previous cases he has to:

Evaluate the system

Take actions
made in Greece

Greek Companies used ABC
1.Not because it was an accounting trend
2.They had actual problems that they tried to solve.
of Greek companies replaced their older traditional systems with ABC successfully.
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