Activity-Based Costing as a Basis for Transfer Prices and Target Setting

Research output: Journal contributionsJournal articlesResearchpeer-review

Standard

Activity-Based Costing as a Basis for Transfer Prices and Target Setting. / Lueg, Rainer.
In: International Journal of Economics and Business Administration, Vol. 8, No. 3, 2020, p. 489-499.

Research output: Journal contributionsJournal articlesResearchpeer-review

Harvard

APA

Vancouver

Bibtex

@article{a6f8b0896414462590646b78bafa0c46,
title = "Activity-Based Costing as a Basis for Transfer Prices and Target Setting",
abstract = "Purpose: The article deals with a division of a large electronics company. The disvison intends to improve its product profitability using Time-driven Activity-based Costing. It also aims at aligning the incentives of executives by setting feasible transfer prices and motivating targets. Design/Methodology/Approach: The article illustrates how variance analysis and Activity-based Costing help managers to understand the different profitability of products better. Findings: The case study can serve both as a discussion basis in class as well as an exam for students in management, operations, and accounting. Practical Implications: Students will need to reflect on how a mechanical application of incentive systems can lead to dysfunctional decisions that run counter to a company's business model. Originality/Value: The open questions at the end of the article serve the purpose of raising students' awareness of the limits of cash-based incentive systems.",
keywords = "Management studies, Product profitability, activity-based costing, transfer prices, target setting, incentives, restructuring, shareholder value, customer satisfaction",
author = "Rainer Lueg",
year = "2020",
doi = "10.35808/ijeba/539",
language = "English",
volume = "8",
pages = "489--499",
journal = "International Journal of Economics and Business Administration",
issn = "2241-4754",
publisher = "University of Piraeus, International Strategic Management Association",
number = "3",

}

RIS

TY - JOUR

T1 - Activity-Based Costing as a Basis for Transfer Prices and Target Setting

AU - Lueg, Rainer

PY - 2020

Y1 - 2020

N2 - Purpose: The article deals with a division of a large electronics company. The disvison intends to improve its product profitability using Time-driven Activity-based Costing. It also aims at aligning the incentives of executives by setting feasible transfer prices and motivating targets. Design/Methodology/Approach: The article illustrates how variance analysis and Activity-based Costing help managers to understand the different profitability of products better. Findings: The case study can serve both as a discussion basis in class as well as an exam for students in management, operations, and accounting. Practical Implications: Students will need to reflect on how a mechanical application of incentive systems can lead to dysfunctional decisions that run counter to a company's business model. Originality/Value: The open questions at the end of the article serve the purpose of raising students' awareness of the limits of cash-based incentive systems.

AB - Purpose: The article deals with a division of a large electronics company. The disvison intends to improve its product profitability using Time-driven Activity-based Costing. It also aims at aligning the incentives of executives by setting feasible transfer prices and motivating targets. Design/Methodology/Approach: The article illustrates how variance analysis and Activity-based Costing help managers to understand the different profitability of products better. Findings: The case study can serve both as a discussion basis in class as well as an exam for students in management, operations, and accounting. Practical Implications: Students will need to reflect on how a mechanical application of incentive systems can lead to dysfunctional decisions that run counter to a company's business model. Originality/Value: The open questions at the end of the article serve the purpose of raising students' awareness of the limits of cash-based incentive systems.

KW - Management studies

KW - Product profitability

KW - activity-based costing

KW - transfer prices

KW - target setting

KW - incentives

KW - restructuring

KW - shareholder value

KW - customer satisfaction

UR - https://www.mendeley.com/catalogue/a06b54b4-958b-32ac-a64b-278eea73a59a/

U2 - 10.35808/ijeba/539

DO - 10.35808/ijeba/539

M3 - Journal articles

VL - 8

SP - 489

EP - 499

JO - International Journal of Economics and Business Administration

JF - International Journal of Economics and Business Administration

SN - 2241-4754

IS - 3

ER -

DOI