A Comparison Study Of Existing Costing System With Activity Based Costing System (ABC) At A Metal Industry

Mohd Saharuddin, Noordin (2010) A Comparison Study Of Existing Costing System With Activity Based Costing System (ABC) At A Metal Industry. Project Report. UTeM, Melaka, Malaysia. (Submitted)

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Abstract

Nowadays, competitive among manufacturing companies in Malaysia are getting tense. There are four main factors determines the competitiveness; lowest cost, high quality, delivery on schedule as well as complying to environmental standard. Most of the manufacturers nowadays determine their cost of product based on direct cost and indirect cost. A typical weakness of this system is on tracing the overhead cost that can be distorting the product cost since the overhead cost has become larger proportion in product cost. In order to improve the current costing system, a new system was introduced and represent which named Activity Based Costing (ABC). This system is widely used in industry to control the product cost efficiently. This study was implemented in Small Medium Industry (SMI) of metal industry at Melaka. The manufacturer currently using the absorption costing system in order to determine the product cost. Based on the result of comparison between two systems, ABC is a more precise profit analyses, more accurate costing and better allocation of overhead.

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