Activity based costing and an application in textile (carpet) business

In order to be successful for businesses in our current global competition, it is inevitable to renew and develop themselves continually. The conception of production and trade practices in the past has begun to lose its importance. In the past, the issues such as production of products, pricing and marketing activities weren?t overemphasized and such activities weren?t based on any methods.Nowadays, the spread of the means of communication, the awareness of consumer rights being more well-known and protected by laws and the consumers being able to reach any markets they demand and choose any price and quality among the products have directed the enterprises to work in the light of more accurate and up-to-date information on issues such as producing goods, pricing and marketing.The Activity Based Costing, which is one of the resulting strategic costing methods, has emerged as an alternative to traditional cost methods in order to provide more accurate and reliable information on cost. As the traditional cost systems have added the costs as traditional-based on products, they have resulted in adding much or less cost on some products than they should. Traditional cost system bases on the assumption that the products consume the resources.Activity-Based Costing doesn?t add the costs on products according to the base volume, but it adds according to the activity-base. Activity-Based Costing was first designed for manufacturing enterprises and in the coming years it was established that it would also be an appropriate method for service businesses, and as a result of this it was started to be implemented in these enterprises, too.An application was performed in a carpet manufacturing enterprise in this thesis as well.Keywords: Activity-Based Cost, Traditional Cost Systems, General Production Costs, Cost, Resource