Activity based costing and activity analysis: An application in a textile firm

Traditional cost systems were used by labor- intensive companies in order to determine the cost of products. However, these cost systems were insufficient for the requirements of today?s businesses. Accordingly, ?Activity Based Costing? system has emerged. Activity Based Costing system takes into account the activities required by the products so the results which are more accurate and reliable are obtained. In this context, an analysis of the activities has gained importance in the business area. According to the activity analysis, non- required and non- value added activities are determined. Thus, managers can make a timely decision for obtaining significant cost savings.