ACTIVITY BASED COSTING APPLICATION METHOD IN DETERMINATION OF COST OF PRODUCTION IN CV. AKE ABADI

Abstract

Activity based costing (ABC) can provide a better information about cost and help management to manage the company efficiently and gain a better understanding on competitive advantages, strengths, and weaknesses of the company. The purpose of the study to compare the magnitude of the cost of production using conventional methods currently applied by CV. Ake Abadi with prices of good produced by the method ABC. The analytical method used is descriptive. Research show the calculation of cost of production using the ABC system gives lower yields than conventional system, while the mineral water bottles of 330 ml Ake provide higher yields than conventional systems due to the calculation with conventional system only using one cost driver thet produces an irrelevant result. CV. Ake Abadi management should begin to consider the calculation of cost of production by using the ABC system, after taking into account external factors such as the price of competitors and the people purchasing power.

 

Keywords: method of activity based costing, cost of production