Crane – Naval Surface Warfare Ctr.
Gail W. DePuy, John S. Usher, Cindy R. Edlin, G. Don Taylor
University of Louisville
The purpose of this project was to evaluate costing methodologies in place for various overhead activities and to develop an ABC software tool that more accurately apportions indirect costs to activity centers and then to specific products and services at Crane.
Activity based costing (ABC) systems have been applied very effectively in manufacturing settings but repair and rework activities for legacy systems is much more challenging due to the stochastic nature of demand and work content requirements. Even so, it may be possible to apply ABC methodologies to gain better performance in terms of cost control, cost reporting, and cost estimating. This project seeks to examine this topic and to provide software and methods to assist in utilizing ABC methods in this challenging environment. Although the project is motivated by military applications at Crane-Naval Surface Warfare Center, the findings should prove to be somewhat more universal.
The ABC spreadsheet presented herein supports the goals established. Not only did the spreadsheet build upon an evaluation of the existing costing methods in place at Crane, but it actually used the existing MS Excel spreadsheet as a basis for the main worksheet