An application of activity based costing as a decision tool

Hard competition in today?s trade conditions in all markets all around the world, make companies to analyze their profitability frequently. In this hard competition, all companies firstly try to protect their profitability and than try to get more profit from their business, without loosing any market share. Nowadays, managers see the reality that financial numbers are the results and can not be managed directly. To remain competitive in the market, activities and processes must be managed and improved. The best way of managing and improving business starts with analyzing the current situation. For this reason, different techniques started to be used for analyzing profitability. By the help of these techniques, continuous improvement get started to be used in today?s management mentality. In this study, one of the commonly used profitability analyzing tool and decision making tool called Activity Based Costing will be explained with model studies and real studies. Information about Activity Based Costing method and other costing methods will be given. In addition, an alternative method will be used to compare the results and to make a better decision. The aim of doing this study is to analyze the profitability of a worldwide company?s all customers for whole year activity. By the help of this analysis decisions will be taken to improve profitability and to improve the business of the company, without loosing any market share. Keywords: Activity Based Costing, Activity Based Management, Cost Management, Traditional Cost Management, Modern Cost Management, Direct Costing.