Braden Bybee, Southern Utah University
Research Question What is the value of activity-based costing systems in small business evaluation and market entry decisions? Purpose The purpose of this study is to show the value that activity-based costing systems can have for small business companies compared to the common method of traditional costing. The Bureau of Labor Statistics estimated only 50% of small businesses survive for five years or more, so perhaps the commonly used traditional costing method is leading managers astray. I hope to show that activity-based costing can greatly empower small businesses to not only survive, but to grow confidently in a profitable direction. Research Method I will use my personal multi-state pest control business statistics from 2017 to create a traditional costing business model as well as an activity-based costing business model. I will apply these methods to current business product mixes, labor costs, machinery costs, and marketing costs and to desired future changes for 2018. I will compare these results with several local markets in Southern Utah and local markets across Iowa. I will then compare the results between the traditional costing method and the activity-based costing method to evaluate performance in markets already entered into and show which markets are enterable for this upcoming year. The dependent variables are business performance and the choice to enter select markets in the future. The independent variables include the business model product mixes, labor costs, machinery costs, and marketing costs as well as the local market prices. My hypothesis is that activity-based costing will allow me to enter new markets in 2018 that before seemed too competitive to make a profit and also that I will be able to expand my services more aggressively because I will understand the costs in much greater detail.