Activity-Based Costing for E-Business

This paper proposes the use of Activity-Based Costing to more effectively track costs associated with E-Business. The usefulness to E-Business of Activity-Based Costing, already proven to be beneficial to manufacturing companies, is discussed. The author’s extensive experience with “New Economy” business, as well as Activity-Based Costing issues in traditional “brick-and-mortar” companies, lead to the development of an Activity-Based Costing system for an Internet-based sports-goods superstore. The implementation procedure for this company can be used as an example for other E-Businesses interested in using Activity-Based Costing. Finally, this paper examines several possible benefits to the strategic decision-making process and financial performance of E-Businesses, as a direct result of implementing Activity-Based Costing.