Printing Impressions

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Enter the World of Activity-based Costing--Dickeson

April 2001
Ordinarily I receive an e-mail response or two to my scribblings here, sometimes none at all. But my column in January must have touched a nerve. It was headlined by the editor, "Goodbye Job Cost Accountancy."

Half a dozen readers posted e-mails, one from as far away as South Africa. Printing Impressions is demonstrably an international journal. I've had postings from Birmingham, UK, and Beirut, Lebanon, just in the past weeks.

The monthly database I keep for web printers has included firms in Austria, Canada, Australia and Sweden. Yes, it is a small world growing smaller by the hour with the reach of the Internet.

I subscribe to an e-letter called JOHO (Journal of Hyperlinked Organization) by David Weinberger, (http://www.hyperorg.com/current/current.html) because it's outrageous, stimulating and provides URLs to undreamed of sources.

Weinberger is writing a new philosophical book and has begun by posting drafts of sections to a Website, inviting critique as he posts. This really intrigued me. I decided to copycat.

I began by posting a draft of the first pages of a book I'm writing to the Web in late February, intending to add pages and revisions from time to time. I fully expect and invite e-mail reactions and interactions leading to improvements in the manuscript and exhibits.

I sent URL notices to the respondents to my January article on Job Cost Accountancy. Readers of this column are invited to join in the hoe-down at http://www.prem-associates.com/WOWDraft.pdf. Activity-based accounting for printing as an adjunct of Enterprise Resource Management is the basic theme, but also utilizing Pragmatic Cost Accounting for marketing analysis.

How to Get Started
One of the first responses raised this question: With all of the present overcapacity hanging over the present print market, how can we expect to implement Activity-based Costing? What's your answer?

Here's my suggestion. We can't begin to address the problem of industry overcapacity. All we can do is examine the capacity utilization in our own enterprise.

Activity-based Costing (ABC) is designed to provide the cost of "not doing," as well as the cost of doing— not just the cost of jobs. Idle time of a binder in our plant is an activity. What is that idleness-activity costing us in profitability? Activity-based Costing provides us the information to support an action decision.

 

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