This paper examines the implementation of the Integrated
Activity-Based Costing and Economic Value Added System
in the service sector. This system is intended for use
by those service companies for which the traditional
costing system is not adequate. Motivations for tracing
overhead cost as well as capital cost, using the
integrated system, are discussed. Resulting improvements
in the reliability of product cost information are
illustrated through the example of a consulting firm
which moved from intuitive cost estimation to reliable
cost analysis. Finally, the impact of this integrated
system on the service sector's decision-making process
and long-term business performance is discussed.
