JRomano
While I do not profess to be an MBA, I believe there are some inaccuracies in your article from the way I was taught ABC. ABC does not average overhead against items. An item made for inventory versus sale should have the activity cost of warehousing and storage; an item made for sale should not have those costs. A repeat sale item should not carry the cost of R&D versus a newly developed product. In my experience, most companies do not use ABC, it more difficult to track, computer costing systems do not account for most variations such as those noted above. If they were, six sigma costing would show immediate differences in the 'true' actual costs of producing an item for sale. Most companies today just smear costs across their product line which makes them less competitive and less understanding on how they actually made profit. It is very difficult to build R&D into the ABC cost model since few would be willing to pay the price for those first units (drug companies patents issues) versus generics. Please look at ABC as you would COQ.