Using ABC to manage retirement plan trustee's record-keeping costs

doi:N/A

eISSN: 1848-137X / ISSN: None

Journal of Cost Management

Volume 18, Issue 1 : 39-43

Review Article

Using ABC to manage retirement plan trustee's record-keeping costs

Mehmet C. Kocakülâh

Scott Basham

Department of Accounting, University of Southern Indiana, United States; American United Life, Retirement-Services Group, Indianapolis, IN, United States

Abstract

The use of activity-based costing (ABC) system by an institutional retirement record-keeping firm to increase profitability is discussed. By utilizing ABC system, the firm assigns fees to the various defined contribution plans for which the firm is the trustee. The need for ABC system origins from the various 401(k) plan features, which may be allowed under a particular company's plan document in the US. ABC system is capable of identifying the activities that are consuming the costs, and makes them targets for process improvements. Process improvement and the limiting or elimination of non-value-added activities will improve profitability of the current plans.

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