The use of activity-based costing system for product cost determination in manufacturing companies.
No Thumbnail Available
Date
2010-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Department of History and International Studies, Adekunle Ajasin University.
Abstract
This study examined three basic systems of costing used in determining product cost information and these are: absorption (traditional) costing, direct costing, and Activity-Based Costing (ABC). Of these three systems, absorption costing and ABC are the common systems use for product cost determination as of today. For a very long time, absorption costing was the system mostly used for product costing; while direct costing is usually used for special decisions or situations. However, in 1988, ABC was introduced through the works of Cooper and Kaplan. It has been argued that when a company manufactures a variety of complex products, ABC is the best costing system to use for product cost determination. To verify this assertion, this paper discussed the use of ABC for product cost determination and used Osisioni Nigeria Ltd, a medium scale manufacturing firm based in Ota, Ogun state, Nigeria as a case study. The study utilized secondary data. The results of the descriptive analysis showed that ABC has great potentials for use in product costing.
Description
This article demostrated with a case study, the use of activity-based costing in product cost determination in a manufacturing setting.
Keywords
Activity-based costing, product cost determination, manufacturing company
Citation
Akinleye, G.T & Adigbole E.A. (2010). The use of activity-based costing system for product cost determination in manufacturing companies. AAU: African Studies Review, 9 (June), 336 -356,