Customer profitability analysis by using activity based costing: A case study on a production company

Since the last period of the 20th century, integration of the technological developments into the production process and globalization have significantly increased the size of the competition than ever before. Those developments have innovated production in both process efficiency and variety of products side, extraordinarily. But it is not reflected in the profitability of businesses at the same rate.Although the first competition area was the production side, now it is focused on the customer profitability. Todays? companies are realizing that the key profit maximization element is customer profitability. At this stage, Activity Based Costing (ABC) has entered the innovations portfolio of businesses tahat want to get ahead of the competition.The main objective of the study: implementation of the customer profitability analysis which will be able to help the managers to make the right decisions for the future, by using ABC system, in the selected manufacturing firm. In this context, both descriptive and explanatory case study methods are implemented in the selected manufacturing firm which was ranked in the fortune 500 in Turkey. Obtained results and the benefits to the representative manufacturing firm by the case study are demonstrated in the section of results.