Modeling Aggregation and Measurement Errors in ABC Systems

Jan-Gerrit Heidgen (), Stephan Lengsfeld () and Arndt Rüdlin ()
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Jan-Gerrit Heidgen: University of Freiburg
Stephan Lengsfeld: University of Freiburg
Arndt Rüdlin: University of Freiburg

A chapter in Operations Research Proceedings 2012, 2014, pp 261-266 from Springer

Abstract: Abstract The model utilized in our paper studies the impact of interacting aggregation and measurement errors in two-stage Activity-Based Costing systems (ABC systems). Based on a simulation study we provide the following first results: (1) The sequence of occurrence of the considered errors is crucial for having either decreasing or partially increasing overall accuracy of reported product costs. Thus, negative interaction effects may overcompensate first-order effects. (2) The type of the aggregation error has a substantial impact on the interaction effects with a measurement error and (3) some discussed interaction effects in the literature can be explained by technical assumptions and restrictions. We propose a solution for further simulation studies of ABC systems.

Keywords: Measurement Error; Cost System; Cost Information; Aggregation Error; Cost Driver (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:oprchp:978-3-319-00795-3_38

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DOI: 10.1007/978-3-319-00795-3_38

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