ABSTRACT
The entry explores obstacles to gaining a clear view of what process costs actually are. It proposes a methodology for moving from the conventional accounting view internal to the organization to a point where product profitability (multicompany) is visible for decision making. The methodology incorporates activity‐based costing (ABC) and adapts it to single company and multicompany analysis. To aid the process, the entry describes a simple categorization of costs that points the way to efforts to reduce them. The proposed method is compatible with “Earned Value Analysis” (EVA, a trademark of the Stern Stewart & Company).
