Activity-based costing for e-business

Summary form only given. This paper proposes the use of activity-based costing (ABC), already proven to be beneficial to manufacturing companies, for tracking overhead costs in e-business. It examines which types of e-companies the ABC system is most valuable for. For example, e-companies which have high overhead expenses, such as administrative salaries, should seriously consider ABC implementation, as high overhead costs, which, when not properly traced, may lead to erroneous cost information and poor decision-making. Calculation of the ratio of overhead to total cost is proposed to help individual companies decide if the ABC system has the potential to improve the reliability of their cost information