Topic : The ABC Simulator: A New Approach to Teaching Traditional Topics Management Accounting, Vol. 10 No.

4 (2009) By: A. James Mc Kee and Keith Lantz

The authors demonstrate on how the ABC Simulator, a teaching or learning aid designed and developed to facilitate understanding of the conceptual and practical distinction between functional-based costing (FBC) and activity-based costing (ABC) which can enhance the learning experience for students. The ABC Simulator, a Flash-based simulation, teaches the conceptual and mechanical distinctions between FBC and ABC using technology rather than texts and lectures.

As for the stage 1 and 2, which is the factory props and production, they have shown all the manufacturing related costs which consist of utility costs, inspections costs, and machine costs. Other types of costs like design, warehousing, shipping, customer support are also relevant and should be measured in the cost assignment. After production of one batch each of the item, the students will have the option of adding more production runs or advancing to the final stage of the cost assignment.

For the stage 3, the cost assignment shows the figure that; as empty as it might currently appear, that would the cost-assignment interface. With the tool, students can assign and compare the costs even perform sensitivity analysis such as using both FBC and ABC.

There is a threat associated with not effectively discussing the accounting for fixed costs. Some students are disposed to believe that ABC is not acceptable for financial reporting and cite the issue of accounting for fixed costs as proof. Hence, the instructor must

make it clear that using the ABC approach for cost pools and also allocating the fixed costs, as Generally Accepted Accounting Principles (GAAP) require, is more accurate than using a single cost pool and one cost driver.

Finally, for fine-tuning the simulator, these are the intent of one of the learning aid which is to help educate the concepts of functional-based costing and activity-based costing. To complete empirical testing of the validity of the approach, preliminary testing suggests students enjoy and learn the concepts involved with FBC and ABC. Some students adapt quickly to the approach and love to experiment with the information in a gaming mode. Others initially dislike the change from a traditional approach but appear to adapt. The empirical question is whether the approach increases the students' comprehension of the concepts, decreases the learning time, or improves the attitude of the students.