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redefine the ?sevalue through changes in product specifications (for example CFC gases in refrigerators and aerosols). In addition many companies, notably vehicle producers, have begun to direct attention towards reducing the weight (and material content) of purchased parts to meet environmental and efficiency targets for themselves.

Managers focus is to reduce the per unit cost in order to gain the maximum benefit these benefit can be achieved through.

The methods through which cost reduction can be achieved are as follows:

Latest technological implementation.

Follow advanced accounting methods.

Supply chain program implementation.

Practicing JIT methodologies.

Control Variance in the production

Minimize cycle time.

Practice best and acclaimed accounting methods.

Provide training to managers with new costing methods.

Activity-based Costing

Activity-based costing (ABC) tries to assign overhead costs to cost objects more accurately than traditional cost systems. Therefore it is often argued that ABC can support medium- and long term decisions, such as make-or-buy, pricing and special orders decisions, or product portfolio decisions. ABC is even considered as a strategic cost system (see, e.g., Cooper and Kaplan, 1988). So far, however, it is not at all clear whether ABC is really an adequate instrument for decision making. Also it is an open question how the quality of decisions supported by ABC depends on the cost drivers of the underlying ABC system. The ABC literature defines an activity as a discrete task that a firm undertakes to make or deliver a product/service, and uses cost drivers to assign activity costs to products, services or customers related to these activities (Cooper, 1988; Ittner et al., 2002). Traditional costing systems use bases like direct labor and machine hours to allocate expenses, associated with indirect and support activities, to products and services. On the other hand, ABC segregates the expenses of indirect and support resources by activities, and then assigns those expenses based on the drivers of these activities (Cooper & Kaplan, 1991). Hence, ABC provides plant mangers with a more structured approach to evaluate the expenses associated with specific activities used to support a product. Researchers have claimed that, since ABC may provide greater visibility into business processes and their cost drivers, it may allow managers to eliminate costs related to non-value added activities and improve the efficiencies of existing processes (Carolfi, 1996). Improved information visibility may also enable the deployment of quality- related initiatives by identifying activities that are associated with poor product quality, and their cost drivers (Ittner, 1999; Cooper, Kaplan, Maisel, Morrissey, & Oehm, 1992). Hence, prior research suggests that ABC may be associated with adoption of process improvement activities, such as total quality management (TQM) programs (Ittner & Larcker, 1997a, 1997b; Anderson et al., 2002). On the other hand, Datar and Gupta (1994) claimed that increasing the number of cost pools and improving the specification of cost bases may increase the frequency of errors in product cost measurement. Banker and Potter (1993) and Christensen and Demski (1997) suggest that the ability of ABC to produce accura