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Application of activity-based costing in estimating the costs of manufacturing process

Jiran, Nur Syamimi and Gholami, Hamed and Mahmood, Salwa and Mat Saman, Muhamad Zameri and Mohd. Yusof, Noordin and Draskovic, Veselin and Jovovic, Radislav (2019) Application of activity-based costing in estimating the costs of manufacturing process. Transformations in Business and Economics, 18 (2). pp. 839-860. ISSN 1648-4460

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Official URL: http://www.transformations.knf.vu.lt/47b/article/a...


Membrane technologies are known as one of the sustainable solutions in treating wastewater from the manufacturing industry to maintain an ecosystem for the future generation. Various studies had explored this technology in terms of the economic aspects, mainly focusing on a certain process and/or only costs such as investment cost, energy cost, and operation cost. This study concentrates on developing a methodology for estimating the total cost of the manufacturing process for the hollow fiber membrane module (HFMM) by using activity-based costing (ABC) technique. ABC was used due to its capability to calculate the overhead cost and generate the information that contributes to improving the overall production activity. Based on the ABC analysis, the overhead cost is RM0.49, while labour and material costs are RM222.97 and RM0.63, respectively. The analysis revealed that extrusion is the highest cost activity and space is the highest resource consumed. Pareto chart and value analysis were employed to determine the areas that need improvement to increase production effectiveness and reduce the total cost further. The research findings conclude that the cost to produce a HFMM is consider cheap, but it can further reduce by eliminating some unnecessary activities.

Item Type:Article
Uncontrolled Keywords:Cost estimation, Manufacturing cost
Subjects:T Technology > TJ Mechanical engineering and machinery
Divisions:Mechanical Engineering
ID Code:87791
Deposited By: Widya Wahid
Deposited On:30 Nov 2020 21:20
Last Modified:30 Nov 2020 21:20

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