The design of activity based costing system and application of a company

Nowadays, global competition forced manufacturing organizations to become more flexible, integrated and highly automated in order to incerease their productivity at reduced costs. Especially, it becomes harder to make rival business for both the countries of European communities and the companies rustling in its country. Therefore, the companies wanting to make dissapear human needs, to serve the society, to employ and make profit wants to ascertain the costs more appropriate for selling their goods and getting profitable investment. In various researches that are made, traditional costing systems based on valume-based allocation of overhead have lost relevance in a manufacturing environment. These systems tend to distort product cost and lead to poor strategic decisionmaking. Therefore, innovative costing method designed to deal with the deficiencies of traditional costing systems is Activity Based Costing. The research problem of this study considers determining how to the design of Avtivity Based Costing System. In this respect the objectives of this study can be stated as: a- Why is the design of ABC system required for companies? b- How is the design of ABC system effect on costs? In order to answer these questions, in addition to a literature rewiew, a company which is small-size and stil using traditional costing systems has been examined as model. Within this framework, the results of the study show that the implementation of a new cost system involves investment in time and money. Therefore, larger firms being more likely to adopt this system than smaller firms. Keywords : Activity Based Costing System, Traditional Costing System, Cost Driver, Cost Poo