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The TOC-ABC choice debate for product mix decisions : introducing asset specificity as an alternate explanation

Sridharan, V. G., Krishnan, Ranjani, Vergauwen, Philip and Arthanari, Tiru 2009, The TOC-ABC choice debate for product mix decisions : introducing asset specificity as an alternate explanation, Journal of global business issues, vol. 3, no. 1, Spring, pp. 105-110.

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Title The TOC-ABC choice debate for product mix decisions : introducing asset specificity as an alternate explanation
Author(s) Sridharan, V. G.
Krishnan, Ranjani
Vergauwen, Philip
Arthanari, Tiru
Journal name Journal of global business issues
Volume number 3
Issue number 1
Season Spring
Start page 105
End page 110
Total pages 6
Publisher Journal of Global Business Issues
Place of publication Burbank, Calif.
Publication date 2009
ISSN 1931-311X
Summary Though constructed with different purposes, the theory of constraints and activity based costing systems pose a choice problem in respect of product mix decisions. We believe that the existing explanation of short versus long run criterion to explain firms' choice between these two systems is incomplete and offer an alternate explanation based on asset specificity. We argue that the extent to which specialized resources are deployed to make products in a mix determines the choice. We present a 2*2 matrix stating that when asset specificity is high, a firm is likely to choose ABC instead of TOC since ABC makes a large portion of costs visible to enable control. However, the choice is likely to be a TOC-ABC combination when the manufacture of asset specific products is also constrained by bottlenecks.
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Language eng
Field of Research 150399 Business and Management not elsewhere classified
Socio Economic Objective 910499 Management and Productivity not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2009, Journal of Global Business Issues
Persistent URL http://hdl.handle.net/10536/DRO/DU:30029808

Document type: Journal Article
Collections: School of Accounting, Economics and Finance
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.