Activity based costing

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Project Description

Requirements for this assignment:

1. You must choose an appropriate application which can range from product mix cost estimation to service based cost estimation.

2. Your exploration must include:

a. Principles of ABC and its relevancy to engineering cost estimation. b. A case study (an academic exercise) with a relatively simple engineering cost estimation with description ABC cost calculations (cost drivers etc), and quantitative ABC analysis. c. Discussion of result on the case study and comparing this with a traditional cost estimation result.

The assignment report should consist of:

1. Introduction 2. Literature review (reviewing relevant cost estimation techniques/methods to your case study) 3. Case Study (with clearly stated methodology and application of ABC with all relevant cost drivers) 4. Discussion and conclusions 5. Further work 6. References

EN0718 Page 2 Dr John Tan

Marking criteria:

Introduction & Literature review 30% Case study 40% Discussion, conclusion and further work 20% Presentation of written report 10%

A pass mark is awarded to work presented with concise and critical review of literature relevant to the presented case study, with appropriate referencing. Case study presented clearly with appropriate ABC computations. Results are then discussed with clear conclusion and indications for further work.

A commendation mark is awarded for work presented as described for pass mark, and with an indication of the relevancy of case study in the overall scheme of cost estimations.

A distinction mark is awarded for work as for work presented for commendation mark, and with an indication of further exploration in the area of innovative method(s) and the possible inclusion of these methods in the case study.

A quantitative case study must be included, non-compliance of this requirement amounts to failures to meet learning outcomes 1 and 2 which will result in a failed mark for this assignment.


1. Innes, J., Mitchell. F. And Yoshikawa (1994). Activity costing for engineers, John Wiley and Sons. 2. Innes, J. and Mitchell, F. (1998). A practical guide to activity-based costing, Financial skills series, Kogan Page [for] the Chartered Institute of Management Accountants. 3. Brimson, J. A. (1991). Activity accounting : an activity-based costing approach, The Wiley/National Association of Accountants professional book series, Wiley, Chichester. 4. Hicks, D. T. (1999). Activity-based costing : making it work for small and mid-sized companies, Wiley, Chichester.

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