Customer Reviews
Classic work on activity-based costing, management and strategy - By: Rolf Dobelli, 18 Dec 2007 
Robert S. Kaplan & Robin Cooper's work on activity-based costing has achieved the status of a minor classicin managerial accounting literature. First publishedin 1997, it explained why activity-based costing has advantages not only for accounting, but also for management & strategy. Moreover, it linked the advantages of activity-based costing to what, at the time, seemed to be novel ideas about economic value added & enterprise systems. Nearly 10 years after its initial publication, the book seems surprisingly fresh & relevant (notwithstanding the authors' enthusiasm for the "information age" & the potential of enterprise systems). The authors present the case for activity-based costingin a clear & straightforward manner. The book is well-organized & surprisingly free of jargon. We recommend it as a good introduction to managers who are new to the subject. Even those familiar with the concept & practice of activity-based costing may find useful reminders of basic principlesin this book.
Evolving Toward Better Financial Information and Actions! - By: Donald Mitchell, 07 May 2004 Cost & Effect will most appeal to those who have had extended experience with Activity-Based Costing (ABC) or operatein manufacturing industries.
If you are interestedin learning more about Activity-Based Costing, this book is not the best choice for you. Professor Kaplan has co-authored books that explore this subjectin much greater detail.
Most people set as their initial priority the need to have accurate financial reporting for the entire enterprise. Falling below that level of effectiveness is Stage Iin the terms of this book. Once you have that financial reporting done accurately, you are at Stage II. But you know almost nothing about how to manage your costs better. In order to do that, you will need to establish ad hoc financial reporting processes designed to help your organization learn from its experience & identify opportunities for improvement, built around Activity-Based Costing (ABC). ABC is simply a way of more accurately applying overhead costs back to activities & then processes that permits accurately understanding more about which combinations of products & services & customers are profitable & which are not. Then, within each activity, you can also see the inefficienciesin what you are doing that present opportunities for improvement. The book also has a nice discussion of Kaizen costing that is widely usedin Japanese companies looking for on-going cost improvements, based on Professor Cooper's research. There are a few case histories to illustrate the principles, but most will find these insufficient to guide them through the process. In other books, Professor Kaplan has pointed out that there is a lot of acquired artin the subject & you probably need help to get it right. I concur. Once you have ABC operatingin stand-alone systems, you are at Stage III.
At this point, you will have a financial reporting system that is separate from the ABC system. How do you put them together? That the subject of chapter 14, which is the key value-added part of this book. You will see what the systems architecture & process flow needs to bein order to combine ABC with Enterprise-Wide Systems (EWS) of the sort that many large companies have investedin during recent years. Putting the two together will greatly improve planning, budgeting, design of new products & services, & operational improvements. Chapter 15 expands into the area of how to apply the combined system to budgeting & transfer pricing. Combing ABC & EWS puts you at Stage IV, a level rarely reached today.
The book's main message is that it's a mistake to try to go from Stage II directly to Stage IV. There's a lot of experimentation & mistakes that you can benefit fromin an extended Stage III. I agree again, based on my experience with ABC.
The one caution you should have about ABCin this context is that if you are going to radically change your business model every 2-5 years as many companies are, Stage IV is probably unattainable & undesirable. You can't hold back business model innovation for better cost systems. The next business model innovation will probably give you better costs than tweaking the current business model with ABC will.
Seek out the fastest route to progress, & do more of it!
The book I use every day! - By: , 18 Feb 1999 I would like to have itin German & French languagesin order to recommend it to my colleagues.
Great book to understand how to make ABC really useful - By: , 12 Jun 1998 This book drives the business & finance community to rethink how a company should handle cost. It shows the 4 stages of financial reporting & ABC strategies. Companies have to switch their strategy of using traditional financial reporting to understand business performance & make it the other way around. Business Management Reporting should drive the Financial Reporting & the accountants should handle Financial Reporting for external needsin a locked room. This issue is analyzed from the ABC eyes. It is a must read book, innovative & out of the box thinking.
Brazilian Bank cases using ABC + Standard Cost (with Budget) - By: , 16 Mar 1998 
Kaplan was succesfullin your book by putting together very importante concepts about cost: accurate use of ABC/ABM, Standard Cost with budget systems. In Brazil, since 1995, we have been developing this conceptsin pratical cases with major bank institutions (both brazilian & foreign). Kaplan put lightin the main concepts but failin bring robust experiencesin Financial Sector: most of banks, brokers, insurance companies are wrongin your profitability calculations; big financial groups around the world need build these conceptsin your daily life. I hope Kaplan could help us with cases about this matter. Thank you.
