Application of activity-based costing method in textile production enterprise; Denizli province example

Technological advances have led to changes in the cost composition of products, resulting in a shift towards higher indirect costs and lower direct labor costs. When making pricing decisions, managers increasingly value precise cost information. Activity-Based Costing (ABC) method, which emerged with the influence of developing technologies, offers a more precise cost calculation method compared to the volume-based costing method. However, this particular framework is open to criticism due to its costly and complex nature, as well as significant challenges in implementation and sustainability. To address the limitations of ABC, a new cost system known as the method has been created. This new method is designed to be more convenient in terms of installation and maintenance. In this research, indirect and direct expenses in Textile Production Enterprises were distributed to activities by following the Activity Based Costing (ABC) method and using the case study approach in order to highlight the variances. Therefore, whether it is possible to implement this in a textile production facility and its impact on expenses were determined. The study revealed that expenses related to goods produced in-house are more suitable for the ABC method compared to the volume-based costing method.