CASE STUDY: Boeing Commercial Airplane Group Wichita Division (Boeing Co.)

Abstract

Activity Based Costing and Management (ABCM) is one of many new financial and accounting tools aimed at providing more complete, better-aligned data on economic performance. It is important to explore early experiences with this concept since it represents a new set of “rules” that can have implications for all stakeholders in an aerospace enterprise. ABCM is of particular interest with respect to lean practices and principles since it links the cost of production or services to the relevant support activities, which is helpful in targeting continuous improvement efforts. Companies who are focusing resources on organizational learning initiatives will also find that ABCM processes add value to these efforts. This case study hopes to deepen understanding of ABCM principles by looking beyond the survey data and tracing early experience in an aerospace setting. Note that these are just pilot demonstration initiatives and do not represent full-scale implementation. In presenting this study, we are not advocating for or against this particular approach to financial accounting – just seeking to better understand its implications.