A study on the customer profitability analysis using activity-based costing

Abstract

Activity-Based Costing (ABC) which has become an important aspect of manufacturing or service organizations can be defined as a methodology that measures the cost and performance of activities, resources and cost objects. It can be considered as an alternative paradigm to traditional cost-based accounting systems. Customer Profitability Analysis (CPA) is an important path to a more successful business operation, offering new insights into enhancing company performance. A well-designed and implemented ABC system is a powerful aid to management evaluation and decision-making, thereby improving organizational performance. This paper was aimed at unravelling the practical complexities of implementing ABC for CPA purposes. © 2011 Springer-Verlag Berlin Heidelberg.