Activity based costing and an application in a company in aerospace industry

This thesis aims at showing the weak points of the costing method used in a public organization which carries out production in aerospace industry and determining the convenience of Activity Based Costing (ABC) as an alternative costing method for this enterprise. In this thesis, firstly, traditional costing system is mentioned and the details of ABC are explained. Secondly, to make these subjects clear, the selected enterprise?s current costing system is analyzed and critics about the system are presented. Lastly, ABC, which is thought as an alternative to the current costing system, is applied phase by phase. At the first phase of implementing ABC, resources are defined and the expenses related to these resources are determined. At the second phase, activities are defined and the costs of these activities are calculated by using the expenses which belong to the resources. At the last phase, the costs of the products are calculated by using the activities and activity costs. At the end of the thesis, the comparison is made for the results of ABC and the current costing method. The results show that the ABC creates a correct perspective to product costing in comparison to the current costing system. Keywords : Activity Based Costing, Traditional Costing Methods, Product Unit Cost, Aerospace Industry.