Evaluation and analysis of costing systems in a postal services company

Abstract

Purpose: This research sets out to evaluate and analyse the current cost accounting system used in a local postal services company and the suitability of Activity Based Costing in the postal industry. Additionally, it aims to gain knowledge and a better understanding of the cost accounting systems used in other foreign postal companies, including their perspectives, and the impact and influence that National Regulatory Authorities have on cost accounting in postal services. Design: Several interviews were conducted with high ranking officials from the Case Company, with a MCA Representative, and a Company’s IT Supplier representative. Additionally, a questionnaire was sent out to gather information from postal companies in Europe. Findings: Findings show that the Case Company operates mainly a TDABC system and all companies in this study use ABC. The majority of these find ABC mainly suitable. However, ABC does not satisfy all their needs. The Profitability Cost Approach is the most popular approach for calculating the USO. National Regulatory Authorities have a huge impact and control on the cost accounting systems used by postal companies. Conclusion: Findings conclude that the cost accounting system used is appropriate and suitable apart from one issue which revolves around the allocation of fixed and common costs. The Commercial Approach to calculate the USO is the most suitable. Automation is the next enhancement for the Case Company. Implications: Postal companies should look at additional costing methods and tools which may be more beneficial, especially in increasing their negotiating power with regulatory authorities to increase prices, which would help increase financial performance.