CASE SOLUTION FOR INDIANPOLIS: ACTIVITY-BASED COSTING OF CITY SERVICES (A)

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Complete Case details are given below :

Case Name :  Indianapolis: Activity-Based Costing of City Services (A)
Authors :        Robert S. Kaplan
Discipline :     Accounting
Case Length : 15 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)

Description for case is given below :
A new administration in the City of Indianapolis is initially determined to privatize many municipal services. Before taking this action, however, the city managers want to know the current cost of performing these services with the municipal workers. Existing financial systems record how much the city has been spending by functional categories and departments, but contain no information about the cost of providing services. The city establishes a task force to develop activity-based (ABC) estimates of the cost of filling potholes. It shows the information to the municipal workers and allows them to institute new cost-saving procedures so they can submit their own bid in competition with private contractors. This case describes the development of the ABC model and the reaction of the city workers to the newly revealed information.

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