A framework for activity-based costing and product family cost estimation

Platform-based product family design and development can bring economies of scale to manufacturers who offer several products and desire mass production. While strategic in terms of managing direct costs, managing overhead costs related to product families can be complex. Consequently, accurately accessing the economic benefits of a platform strategy and allocating the overhead costs into individual products are challenging tasks for accounting personnel. In this paper, an adjusted activity-based costing approach (ABC) is provided to address these two tasks and estimate individual product costs with consideration of learning effects.