Stock Market Crash Global Financial Crisis

Analysis of the Stock Market Crash and Global Financial Crisis

The stock market crash in the autumn of 1987 is labeled as one of the sharpest markets down in history. Stock markets around the world plummeted in a matter of hours. The Black Monday, as it is labeled, is market as one of the major contemporary global financial crisis after the great depression that hit the global market between 1929 and 1941 (Markham, 2002). In the US, the stock market crash was marked by the 22.6 percent drop in a single trading session of the Dow Jones Industrial Average (DJIA).

In the years leading up to the stock market crash on October 19, 1987, there was an extension of a continuation of a highly powerful bull market. At this period, running from 1982, the market had started to embrace globalization and the advancement in technology. In the years 1986 and 1987, the bull market was fueled by hostile takeovers, low-interest rates, leveraged buyouts and increased mergers (Bloch, 1989).

The business philosophy at the time encouraged exponential business growth by acquisition of others. At the time, companies used leveraged buyouts to raise massive amounts of capital to fund the procurement of the desired companies. The companies raised the capital by selling junk bonds to the public. The junk bonds refer to the bonds that pay high-interest rates by the virtue of their high risk of default. Initial public offering or IPO was another trend used to drive market excitement.

During that time of increased market activity, the US Securities, and Exchange Commission (SEC) found it extremely hard to prevent shady IPOs and the existing market trends from proliferating. 

In the events leading to the stock market crash, the stock markets witnessed a massive growth during the first half of 1987. The Dow Jones Industrial Average (DJIA) had by August that year gained a whopping 44 percent in just seven months. The ballooned increase in sales raised concerns of an asset bubble. The numerous news reports about a possible collapse of stock markets undermined investor confidence and further fueled the additional volatility in the markets.

At the time, the federal government announced that there were a larger-than-expected trade deficit and this lead to the plunge of the dollar in value. Earlier in the year, the SEC conducted investigations on illegal insider trading that spooked the investors (Bloch, 1989). High rates of inflation and overheating were experienced at the time due to the high level of credit and economic growth. The Federal Reserve tried to arrest the situation by quickly raising short-term interest rates to decrease inflation, and this dampened the investors’ enthusiasm in the market.

Markets began to show a prediction of the record loses that would be witnessed a week later. On October 14th, some markets started registering significant daily losses in trading.  At the onset of the stock market crash, many institutional trading firms began to utilize portfolio insurance to cushion them against a further plunge in stock (Markham, 2002). The portfolio insurance hedging strategy uses stock index futures to shield equity portfolios from broad stock market declines. In the midst of increased interest rates, many institutional money managers tried to hedge their portfolios to cushion the businesses from the perceived stock market decline.

The stock markets had started plunging in other regions even before the US markets opened for trading that Monday morning. On October 19, the stock market crashed. The crash was caused by the flooding of stock index futures with sell orders worth billions of dollars within a very short time. The influx of the sell orders in the market caused both the futures and the stock market to crash. Additionally, due to the increased volatility of the market, many common stock market investors tried to sell their shares simultaneously and which overwhelmed the stock market.

Stock Market Crash and Global Financial Crisis
Stock Market Crash and Global Financial Crisis

On the same day, the 500 billion dollars in market capitalization vanished from the Dow Jones Stock Index within minutes. The emotionally-charged behavior by the common stock investors to sell their shares led to the massive crash of the stock market. Stock markets in different countries plunged in a similar fashion. The knowledge of a looming stock market crash resulted in investors rushing to their brokers to initiate sales of their assets. Many investors lost billions of investment during the crash. The number of sell orders outnumbered willing buyers by a wider margin creating a cascade in stock markets. Following the 19th October 1987 crash, most futures and stock exchanges were shut down in different countries for a day.

Federal Reserve Stock Market Crash

The Federal Reserve in a move to reduce the extent of the crisis, short-term interest rates were lowered instantly to avert a recession and banking crisis. The markets recovered remarkably from the worst one-day stock market crash. In the aftermath of the stock market plunge, regulators and economists analyzed the events of the Black Monday and identified various causes of the crash.

One of the findings shows that in the preceding years, foreign investors had flooded the US markets, accounting for the meteoric appreciation in stock prices several years before the crisis. The popularization of the portfolio insurance, a new product from the US investment firms was found to be a cause of the meltdown in stock markets. The product accelerated the pace of the crash because its extensive use of options encouraged further rounds of selling after the initial losses.

Soon after the crisis, the economists and regulators identified some flaws that exacerbated the losses experienced in the stock market crash. These flaws were addressed in the following years. First, at the time when the crisis hit the market, stock, options, and futures markets used different timelines for clearing and settlement of trades. The differences in timelines for clearing and settlements of trades created a potential for negative trading account balances and forced liquidations.

At the time of the crisis, the securities exchange had no powers to intervene in the large-scale selling and rapid market declines. Soon after the Black Monday, the trade-clearing protocols were overhauled to bring homogeneity to all important market products. Other rules known as circuit breakers were introduced, enabling exchanges to stop trading temporally in the event of exceptionally large price meltdowns. Under current rules, for instance, the NYSE is mandated to halt trading when the S&P 500 stock exchange plunged by 7%, 13%, and 20% (Markham, 2002). The reasoning behind the formation of this rule is to offer investors a chance to make informed decisions in cases of high market volatility.

The Federal Reserve responded to the crisis by acting as the source of liquidity to support the financial and economic system. The Federal Reserve also encouraged banks to continue lending money to securities firms on their usual terms. The intervention of the Federal Reserve after the Black Monday restored investors’ confidence in the central bank’s ability to restore stability in the event of severe market volatility.

The intervention of the Federal Reserve made securities firms recover from the losses encountered in the Black Monday crisis. The DJIA gained back 57% or 288 points of the total losses incurred in the black Monday crisis in two trading sessions (Bloch, 1989). In a period of less than two years, the US stock markets exceeded their pre-cash highs.

Stock Market Crash – Explain the role played by derivative trading in the 2008 global financial crisis

The world economy faced one of the most severe recessions in 2008 since the great depression of the 1930s (Landuyt, Choudhry, Joannas, Pereira, & Pienaar, 2009). The meltdown began in 2007 when the high home prices in the US began to drop significantly and quickly spreading to the entire US financial sector. The crisis later spread into other financial markets overseas. The financial crisis hit the entire banking industry; two government-chartered companies to provide mortgages, two commercial banks, insurance companies, among others like companies that rely heavily on credit. During the crisis, the share prices dropped significantly throughout the world. The Dow Jones Industrial Average recorded a 33.8% loss of its value in 2008.

Derivatives are defined as financial contracts that obtain their value from an underlying asset. These financial contracts include; stocks, indices, commodities, exchange rates, currencies, or the rate of interest. The financial instruments help in making a profit by banking on the future value of the underlying asset.

Their derivation of value from the underlying asset makes them adopt the name, “Derivatives.” However, the value of the underlying asset changes from time to time. For instance, the exchange rate between two currencies may change, commodity prices may increase or decrease, indices may fluctuate, and stock’s value may rise or fall (Santoro & Strauss, 2012). These variations can work for or against the investor. The investor can make profits or losses according to these changes in the market. The correct guessing of the future price could lead to additional benefits or serve as a safety net from losses in the spot/cash market, where the trading of the underlying assets occurs.

Standard derivatives are usually traded on an exchange. Other types of derivatives are traded over the counter and are unregulated. The use of derivatives can be dangerous when used for investment or speculation without enough supporting capital. Various factors caused the financial crisis of 2008; derivative trading was among them.

Financial innovation can be associated with the 2008 fall in the global financial market. The financial innovation invented derivative securities that claimed to produce safe instruments by diversifying/removing the inherent risks in the underlying assets. The financial innovations, however, did not reduce the inherent risk but increased it (Santoro & Strauss, 2012).

Derivative instruments were created to help manage risks and create insurance against a financial downturn. In the period leading to the 2008 financial crisis, the intentions of the derivatives have been entirely altered. The derivatives were initially invented to defend against risks and protect against the downside. However, in 2003-2007, the derivatives became speculative tools to make more risk in a move to make more profits and returns. During this period, securitized products which were difficult to analyze and price were traded and sold. Additionally, many positions were leveraged with the aim of maximizing the profits gained from trading the derivatives.

Banks created securitized instruments and sold them to investors. The Federal National Mortgage Association rolled out a concerted effort to make home loans more accessible to citizens with lower savings than the required amount by the lenders. The reasoning behind this idea was to help each American citizen acquire the American dream of home ownership.

However, the banks issued poor underlying credit quality which was passed on to the investors. The information that the rating agencies offered the investors about the certification of the quality of the securitized instruments was not sufficient (Allen, 2013). Usually, derivatives ensure against risk if used correctly, in the case of the events leading to the financial crisis of 2008, neither the borrower nor the rating agency understood the risks involved.

In the turn of events in the meltdown, the investors got stuck holding securities that proved to be as risky as holding the underlying loan. The banks were as well stuck because they held many of these instruments as a way of satisfying fixed-income requirements. They used the assets as collateral.

Financial institutions incurred write-downs during the crisis. A write-down refers to the reduction of the book value of an asset because it is overvalued compared to the prevailing market value. In the events leading to the financial plunge in 2008, assets were overvalued, and the financial institutions and investors felt an enormous negative surprise for holding these “safe instruments.”

In the years leading to the financial plunge, banks borrowed funds to lend so as to create more securitized products. Consequently, most of the instruments were created using borrowed capital or margin meaning that the financial institutions did not have to issue a full outlay of capital. The use of leverage (the use of different financial instruments or borrowed capital like margin to increase the potential profit of investment) magnified the crisis.

Credit default swaps also played a part in the crisis. Unlike options and futures, CDSs are traded in over-the-counter (OTC) markets meaning that they are unregulated. In the period before the financial bubble, the advantageous leverage, and convenience of the CDSs made dealers rush to issue and purchase CDSs written only in debt that they did not own.

The derivatives on different underlying assets are traded in unregulated markets. Derivatives such as CDSs are not widely understood since they are not exchange traded (Allen, 2013). Counterpart default risk in OTC markets produces a series of inter-dependencies among market actors and creates room for risk volatility. The result of this is a systemic risk as witnessed in 2008 in the case of Lehman Brothers Holdings Inc. the lack of transparency in the OTC markets played a part in the occurrence of the economic bubble in 2008. The OTC derivatives and risks associated with them were priced incorrectly, and it overwhelmed the financial market during the recession.

References

Allen, S. (2013). Financial risk management. Hoboken, N.J.: Wiley.

Bloch, E. (1989). Inside investment banking. Homewood, Ill.: Dow Jones-Irwin.

Landuyt, G., Choudhry, M., Joannas, D., Pereira, R., & Pienaar, R. (2009). Capital market instruments ;Analysis and valuation. Basingstoke: Palgrave Macmillan.

Markham, J. (2002). A financial history of the United States. Armonk, N.Y.: M.E. Sharpe.

Santoro, M. & Strauss, R. (2012). Wall Street values. Cambridge: Cambridge University Press.

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Activity Based Costing

Financial Management Concepts and Their Application – Focus on Activity Based Costing

The process or the technique of determining the cost of a service or a product is called cost accounting system. The costs are assigned to cost objects only after collected and classified by the cost accounting system. It is used to estimate the cost involved in developing, designing, purchasing, producing, servicing, distributing and selling different services or products. The heart of cost accounting system is cost allocation and Activity Based Costing (ABC) can be considered as a type of cost allocation. In this essay, different approaches to cost allocation and activity based costing are described. The methods used for cost allocation and activity based costing. Activity based costing received focus when attempts were made to improve the methods of cost allocation. The different ways of implementing cost allocation and ABC approaches in for- profit organizations (corporations) and in real world business enterprises (Akyol and Bayhan, 2005).

Like any other approach involved in business activities cost allocation and activity based costing also have their strengths and weaknesses and a detailed study of these factors ensures the successful implement of these account systems. The costs associated with these account practices are very crucial and they must be considered very carefully in terms of benefits earned by implementing cost allocation and ABC approaches. These systems could be viable only if they are implemented efficiently and they gain efficiency and profitability. The study further discusses about the main objectives of cost allocation and ABC approaches and the relation between various factors like resources, costs, cost drivers and activities. It also signifies the methods of cost allocation like direct allocation, step- down allocation and reciprocal allocation. Activity Based Costing (ABC) has been discussed elaborately for allocating costs to services or products and the different steps involved in the process. The recommendations made in this paper could be used by the users as guideline for charging the fixed and variable costs of one department to other department of the organization (Peter B.B. 1997).

Cost Allocations and Activity Based Costing (ABC)

The process or the technique of determining the cost of a service or a product is called cost accounting system. The costs are assigned to cost objects only after collected and classified by the cost accounting system. Therefore, the process by which some costs or groups of costs are linked with one or more cost objectives, like divisions, departments and products, is basically called cost allocation. Generally, cost objectives which are responsible for causing costs are allocated costs. Costs are linked with cost objectives by selecting appropriate cost drivers. A cost driver is called cost allocation base when it is used for allocating cost. Major costs are allocated, such as cost of raw material for a manufacturing firm or cost of building material for a construction firm are allocated to departments, projects and jobs on an item basis by utilizing cost drivers like quintals of raw materials or tonnes of building materials consumed where as other costs, considering individually, may not be so significant that they need to be allocated individually (Peter B.B. 1997). They are pooled and then they are allocated together. Hence, a cost pool may be defined as a set of single costs allocated to cost objectives utilizing an individual cost driver. For instance cost of everything which are measured in square meters and occupy space like rent of the building, cost of utilities and janitorial services can be pooled together for allocation. Or all the operating expenses of the registrar’s office of a university can be pooled together and it can be allocated to the respective colleges as per the quantity of students enrolled with each department. In brief, the costs caused by the same factor should be given in the same pool. Those factors are called cost driver. In practice, many terms are used by the companies for describing cost allocation. Such terms can be attributing, trace, allocate, reallocate, distribute, assign, burden, load, reapportion, apportion, etc. For describing allocation of costs to cost objectives any of the above mentioned terms could be utilized interchangeably (Cooper and Kaplan, 1988).

Activity Based Costing Dissertation
Activity Based Costing Dissertation

The type of methodology used to measure the cost and the performance of different activities, cost objects and resources is known as the Activity Based Costing (ABC) and it is one of the most important aspects of the organizations engaged in specially manufacturing or service. For the traditional accounting systems based on costs it is regarded as the best alternative epitome of the accounting system. Presently, the organizations engaged in manufacturing and service sector are forced by the global competition for increasing productivity and reducing associated costs and for this they have to be greatly automated and more integrated and flexible. They can only sustain in this competitive world if they adapt to a mechanism of calculating costs which is more than accurate. Activity based costing is regarded as the best alternative of the traditional methods of cost accounting and it is used now a days for assigning costs, using various cost drivers, to activities, further for allocating costs to products on the basis of use of these products for these activities. ABC is used to reduce the stake of distortion and gives information about costs accurately by utilizing various activities as cost drivers (Akyol , and Bayhan, 2005). According to activity based costing, the total cost of a product or a service is calculated by adding the cost of all value added activities involved in the production with the cost of the raw material. It can be explained in different words as the activity based costing method is used to link the cost of activities performed for usages of the resources of the organization (inputs) to the final outputs like services, customers and above all products. Purchasing, engineering, technology, design, quality control and production are prime activities required for a product and each of these activities use resources of various types, for example the working hours of the supervisors or engineers. The activities performed by these resources are measured by cost drivers (Peter B.B. 1997).

The costs that can be associated directly to the product, as per traditional systems of cost accounting, are labor and direct materials. As per activity based accounting system, there are two types of activities – a. value added activities and b. non- value added activities and generally non- value added activities are reduced for improving the performance. ABC is quite useful in calculating costs accurately but it involves extra effort and expenditure for collecting the information required for cost analysis. These difficulties which come across in designing a cost model can be reduced by using a tool properly designed (Peter B.B. 1997).

Cost allocation and ABC approaches in for-profit firms (corporations)

Cost allocation and cost accounting systems are very crucial for any organization and in case of for- profit firms it become vital for the financial managers to be very careful about all the financial consequences within the organization or outside the organization. No any organization can make profit if their managers don’t consider the cost allocation factor seriously. The objective of cost allocation is to;

  1. compute valuations of assets and income and
  2. justify costs and attain reimbursement

For computing valuations of assets and income, cost allocation is done to projects and products for measuring costs of goods sold and inventory. The purpose of these allocations is to provide frequent service to financial accounting. Managers often use the resulting costs for performance appraisal, motivating employees and other managers and planning.

Most of the time prices depend on costs and an accepted bid is to be justified subsequently. This could be understood by citing the example of Boreal which is the largest company of Canada supplying scientific equipments and apparatuses to schools. It has a diverse line of products, hence the process of costing product is comparatively complex. Recently, a combination of several costing techniques for determining the cost of inventory and making allocations was used. The company has many departments for production and for each commodity the activities of production vary from each other. Three guidelines were kept in mind for making allocations:

  1. Fair allocation
  2. Verifiable and rational allocation
  3. Its impact must be known on people using or working with it

.The current input costs and changes in operating costs were reflected by the revised Inventory Costing System. These information were used for making cost allocations(Akyol , and Bayhan, 2005).

ABC approach proved to be beneficial for the company for following reasons:

  • Recalculating selling price
  • Calculating selling prices of different offers including mixture of products or quantity of products
  • Deciding about whether to produce a product in- house or to purchase from market
  • Calculating taxes
  • Calculating profits

The importance of allocations is quite visible in the above example and furthermore it has many intended uses (Peter B.B. 1997).

Different ways of implementing Cost allocation and ABC approaches in real-world business enterprises

In real world business enterprise the ways of implementing cost allocation and ABC approaches are different and they depend on the need and requirement of the enterprise. There is no any defined way of implementing cost allocation and ABC approaches in the real world business enterprise which can be implemented universally. The following example of a transmission company (PJM) illustrates the understanding of the ways of cost allocation. It classifies various methods of transmission cost allocation used in the United States and the world. The following five categories don’t stand alone but give a general idea about cost allocation (Cooper and Kaplan, 1988).

The costs of transmission can be allocated:

  • Between generation and load
  • Amount of usage
  • Generation or peak consumption
  • Basis of flow
  • Basis of monetary impact

These allocations can be implemented by following methods:

Direct Method – As per the name suggests, by direct method, any other service departments are ignored when the cost is being allocated for the department directly to the operating (revenue – producing) department. It can be explained as, the services provided by facilities management to personnel may be ignored as it is a kind of support provided to personnel by facilities management. The cost allocated for facilities management depend on the square meters area used by the production department only. Similarly, the costs of personnel department are allocated to the production department only depending on the number of workers working with it (Akyol , and Bayhan, 2005).

Step- Down Method – It is recognized in the step – down method that the activities of different services are supported by activities of other service departments including production department also. In this method, the allocations are made in a sequence. It starts with the service department providing the greatest service in terms of costs to the largest number of other service departments. It ends with the service department providing the least service in terms of costs to the least number of other service departments. For example, in this method, the cost would be allocated to facilities management before it is allocated to personnel department because facilities management provides more support to the personnel as compared to the support provided by personnel to the facilities management. Once the costs are allocated to facilities management, no costs are allocated back to personnel even if some services are provided to the facilities management by the personnel. The costs of personnel allocated to the production department include the costs allocated by facilities management for personnel (Peter B.B. 1997).

Reciprocal Allocation Method – In the reciprocal allocation method the cost is allocated after recognizing that the services are provided to each other by different service department including production department. This method is considered as the most ideal and correct method due to its ability to cost the relationship between different departments completely for the cost allocation to the service departments. For example, as shown in the above methods, in this method the costs of the facilities management are allocated to the personnel department and the costs of the personnel department are allocated to the facilities management department before they are allocated to the department of production. The costs of the services are allocated first which are provided between two service departments (Cooper and Kaplan, 1988).

It can be noted that the costs can be affected greatly by the method of allocation selected. For example, using a direct method of allocation can make an operation more expensive in comparison to other methods like step- down method or reciprocal allocation method. Similarly, finishing can be an expensive operation if non- direct method of cost allocation is used.

Analysis of ABC’s potential strengths and weaknesses within a company

A number of indirect overhead manufacturing costs can be turned into direct costs by using activity based costing systems.  Direct costs mean the costs recognized specially with selected cost objectives. ABC enables managers to select appropriate cost drivers and activities to recognize numerous overhead manufacturing costs and cost objectives as simply as traditional accounting systems enable them to recognize direct material costs and direct labor costs. ABC based systems classify most of the costs as direct cost which is not the case in traditional accounting systems. ABC system gives great confidence to managers as far as costs of services and products are concerned because they have more information (Özbayrak, Akgün and Türker, 2004).

On the other hand ABC systems are comparatively complex and expensive to traditional systems and it is not affordable by all companies. ABC systems are used by both manufacturing and service industries because of the following reasons:

  • Margins are shrinking due to increasing competition and companies ought to know their accurate margins for their services or products
  • Increasing complexity in the businesses has diversified products, services and even customers. The consumption of resources of the company also varies across customers and products
  • Introduction of new technologies are increasing the share of indirect costs and presently in manufacturing world indirect costs are more important. Automated machines are replacing direct labors.
  • Life cycles of products are shortened by changing technology and it has become difficult for companies to spare time for making price or cost adjustments once error are found

The costs of developing and operating systems are reduced substantially by the use of computers (Cooper and Kaplan, 1988).

Steps needed to ensure a successful implementation of ABC

An Activity based costing system requires four steps for its designing and successful implementation:

  • Determination of key activities, cost objectives and resources to be used is to be known and analyzed by the managers. They also need to identify the output measures (cost drivers) for each activity and resource.
  • A map is needed to be drawn by managers which should be based on process and be able to represent the activity – flow and resources supporting cost objects
  • The third step requires collection of operating data and cost

The last and final step requires calculation and interpretation of the new information based on ABC. A computer is required for the last step because of the complexity involved in activity based costing systems. The process of using ABC information for improvement of operations is known as Activity Based Management (Cooper and Kaplan, 1988).

The associated costs & benefits

The three main purposes of cost allocation are:

  • Motivation
  • Measurement of asset and income
  • Justification of cost or cost- plus contracts

By considering the above mentioned benefits of ABC system the cost involved in its implementation becomes regardless as the system enables to make calculations accurately which is very important for determining the profits. The cost involved in the implementation of ABC system is so high that it is beyond the reach of small enterprise but the benefits are so important that big enterprise cannot manage without it (Özbayrak, Akgün and Türker, 2004).

Efficiency gains

Activity concepts are utilized by Activity Based Costing systems which enables it to link successfully the costs of product to the knowledge of production. For example, what is the process of producing a product or service, what is the time required for the performance of an activity, and finally what is the amount of money required for performing the activity? These all questions are answered efficiently by ABC system of accounting (Cooper and Kaplan, 1988).

Profitability implications

ABC systems are used for inventory of products and determination of income. This is done by using the physical units or method of relative-sale-value. It is becoming popular gradually due to its ability of assigning costs to various activities within an organization, tracing costs to products or services depending on cost drivers measuring the reasons for the costs of the activity. It helps in improving profitability of the organization by quality improvement and waste elimination. It also increases profitability by focusing on quality, reducing inventory, making production cycle short and by flexibly using human resources and operating assets. As these factors are non- value added activities and it results in reducing operating costs and increasing profitability (Özbayrak, Akgün and Türker, 2004).

Conclusion and recommendations

The traditional systems of accounting are gradually becoming irrelevant in the present competitive business world when things are changing very fast. Traditional costing system under costs the product because they are not able to consider the hidden costs involved in production. ABC systems enable to cost accurately and hence to calculate profitability accurately. Sometimes traditional methods over cost the product due to their incapability of calculating costs accurately and the price of the product become incompatible in the competitive market.

In nut shell it can be said that businesses have to adopt the Cost Allocation and ABC systems to sustain in the competitive business world. It is an expensive practice but keeping its utilities in mind the cost becomes negligible because it enables businesses to calculate profitability accurately without which business has no meaning.

References

Akyol D.E., Tuncel G. and Bayhan M. 2005. “World Academy of Science, Engineering and Technology”, Vol 3

Peter B.B. 1997. “Activity-Based Costing An Emerging Foundation for Performance Management”

Özbayrak M., Akgün M. and Türker A.K., 2004. “Activity-based cost estimation in a push/pull advanced manufacturing system,” International Journal of Production Economics, vol. 87, pp; 49–65

Cooper R., and Kaplan R.S. 1988. “How cost accounting distorts product costs,” Management Accounting, vol. 69,  pp; 20–27

Kim G., Park C.S. and Kaiser M.J. 1997. “Pricing investment and production activities for an advanced manufacturing system,” Engineering Economist, vol. 42, no. 4, pp; 303-324

Gunasekaran A. and Sarhadi M. 1998. “Implementation of activity-based costing in manufacturing,” International Journal of Production Economics, vol.56-57, pp; 231-242

Ben-Arieh D. and Qian L.2003. “Activity-based cost management for design and development stage,” International Journal of Production Economics, vol.83, pp; 169-183

Lewis R.J. 1995. “Activity-based models for cost management systems,” Quorum Books, Westport, CT

Köker U. 2003. “Activity-based costing: Implementation in a sanitaryware company,” M.Sc. Thesis, Department of Industrial Engineering, University of Dokuz Eylül

Cokins G. 1997. “Activity-based cost management making it works,” McGraw-Hill. Inc.

Elliot, B. & Jamie E. 2004. “Financial accounting and reporting”, Prentice Hall, London, p. 3,

Goodyear and Earnest L.1993. “Principles of Accountancy”, Goodyear-Marshall Publishing Co.,  p.7

Singh W. and Ramnik. AICPA committee on Terminology. Accounting Terminology Bulletin No. 1 Review and Résumé.

Friedlob, Thomas G. & Plewa, Franklin J.1996. “Understanding balance sheets,” pp; 1

Carruthers, Bruce G., & Espeland, W. N.1991. “Accounting for Rationality: Double-Entry Bookkeeping and the Rhetoric of Economic Rationality”, American Journal of Sociology, Vol. 97, No. 1, pp: 40-41,44 46,

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