The Importance of Using Attribute-Based Costing in Facility Management

Abstract

The traditional cost system has been criticized recently because it is done in an inappropriate manner and deviations in the cost occur. Therefore, modern facilities have tended to shift to an attribute-based costing system (ABC), because it provides accuracy and speed in calculating costs, which are important factors in helping the company Not only in preparing cost reports but even in reviewing the pricing of their products and linking these prices to the size of demand and competition. With the growing competition in businesses, satisfying clients’ individual needs has turned inside a competitive edge. Highly diversified client's requirements lead to not only high product variety but also the associated cost implications. Hence, several recent approaches have arisen to develop the traditional systems to measure the costs to meet the new environmental needs, including Attributes Based Costing (ABCII). The attribute-based costing is one of the most important costing methods. It is an extension of Activity-Based Costing (ABC), where employs detailed cost-benefit analyses concerning information on client requirements. It is proposed due to the limitation of ABC. This research investigates the importance of using attribute based-costing in facility management. In this regard, the ABC II is important for any facility management due to the ABC II helps the economic units to put good planning and strategies for the product costs and achieves the target cost and target quality. Therefore, the ABC II reduces costs and increase profits, as well as identifying attributes that met customer needs and desires in the product which achieves their satisfaction and lastly the ABC II will achieve competitive advantage and efficiency for the overall company.

Keywords: Attribute-Based Costing, Activity-Based Costing, facility management.