Implementation considerations for activity‐based cost systems in service firms : the unavoidable challenge

Aims to increase the knowledge about benefits and drawbacks when a service firm implements activity‐based cost systems as a managerial tool for calculating the costs of different services. States that an activity‐based costing system has its starting‐point in a customer′s total perceived service quality as the needs of the customers must be met; otherwise the service firm is unable to produce the right services at the right quality level. Claims that in service firms a common problem is that overhead costs are extensive and that it is difficult to allocate costs to the right services as many activities must be carried out to produce a service. States that in some service firms it is, however, quite easy to trace costs to the right service, e.g. a bookkeeping firm.