Activity based costing application in a medical supplies manufacturing company

Improvements in production technologies in addition to information and communication systems, increases in international competition and necessity of customer oriented approach cause businesses to seek for new methods in area of cost management. Today, a cost information system is expected to be restructured to satisfy the needs of changing conditions and to provide timely, accurate and reliable information for managerial decisions.The goal of this study is to develop an Activity Based Costing (ABC) model for a company which manufactures disposable medical supplies to determine accurate sales prices and make strategical decisions. Firstly, all activities were examined and modelled with IDEF0 diagrams. After the activity costs were calculated, product costs were found. At the end of the study, product costs calculated by ABC system and current traditional costing system of the company were compared. By the help of this analysis, right pricing decisions will made to be live in competitive market and how the product costs will be reduced for target prices will be determined