Application of activity-based costing to a land transportation company: A case study GAN KOK HOW A SET1

 Many difficulties for land transportation companies and one of the main difficulties in land transportation companies is to determine and evaluate true cost of their operations and services.  ABC can be very helpful for transportation companies to determine cost of their operations with higher correctness. Introduction

 ABC now a day used rarely by the service sectors, for example logistics sector.  Cost calculation of the products and services in traditional costing is based on the determination of direct costs and indirect costs and then summing them to find the individual cost of each element.  Traditional costing involves collecting indirect costs from departments and then allocates them to products or services Contents

 Resource driver is an allocation rate of an individual resource and shows the resource consumption levels of the activities.  Some drivers are used for the allocation of costs of the activities to the cost objects in a similar manner of first stage cost allocation. Contents

 ABC makes backward-looking in order to support forward decision making.  The usage of multiple cost drivers in ABC brings the advantage of detailed cost estimation  Direct costs and indirect costs should be determined precisely. Contents

 ABC had bring many opportunities for the business market after development.  organization especially to logistics pose several challenges which do not generally exist for ABC applications in manufacturing.  Activities performed in a manufacturing organization are generally known with certainty, but they cannot be easily defined in many service and logistics organizations. Contents

 the initial step of ABC analyses is the identification of overhead categories. Contents

 Application of ABC method to a land transportation company is presented.  The results obtained from the ABC analyses are also compared with the traditional cost accounting practice of the company in order to see if there is a difference.  The paper makes a useful contribution to the logistics literature by presenting how ABC along with business process modeling can be applied to a land transportation company through a detailed case study. Conclusions

 Market structures of products and services enforced companies to manage their costs according to business competition.  a company should be able to provide high-quality services and products in a short period of time with lowest possible cost.  a gap has emerged between the accounting information gathered and the modern business management. Opinion

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