Implementation of an activity-based costing system in a small manufacturing company

Abstract

This paper describes the implementation of an Activity-Based Costing (ABC) system in a small, high-technology medical device manufacturing company. We have made an attempt to discuss the problems faced in this endeavour and possible solutions to those problems. This paper demonstrates the benefits derived by implementation of an ABC system in a small manufacturing company. It is also shown that even for a small business producing a low volume of products, there is a possibility of distortions in the true product costs should traditional costing methods be used. We believe that the methodology used can be applied in a wide range of industries with similar characteristics. We also believe that the methodology described can be used by mid-size and large companies. The only difference will be in the scope and complexity of the system.

Notes

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