Characterisation of activity based costing on remanufacturing crankshaft

Abstract

Traditional cost accounting applied by most remanufacturing industries assumes that manufacturing overheads are driven by the volume of production. However, this would not give a good measure of the actual manufacturing cost per unit because the overheads should actually be apportioned over the number of activities that are required to perform. Eventually, the cost of remanufactured crankshaft becomes obviously incorrect while the profitability becomes vague. The aim of this work is to estimate the cost of remanufactured crankshaft using activity based costing. The overhead costs are apportioned to activity drivers in accordance with the way resources are consumed and then, the overhead costs are apportioned from each activity driver to each cost object in proportion to the amount of the cost driver consumed by the product. The proposed method is validated by an industrial practitioner and expected to be able to serve as a useful approach because it produces a cost with accurate allocation of overhead, provides cost information on the cost drivers and produces accurate manufacturing cost and profitability information. This work is also supported by the Ministry of International Trade and Industry of Malaysia by proposing accurate allocation of overhead to strengthen the national remanufacturing policies for the development of remanufacturing industries as these industries need to sustain their end of life products.

Parametric Cost Estimation Model for Li-ion Battery Pack of E-motorcycle Conversion based on Activity Based Costing

“…Some studies are used as a reference in the determination of cost driver and parameter costs, including research conducted by Sutopo, Nizam, Purwanto, Atikah and Putri [20]; W. Sutopo; A. Eliza; R. Ardiansyah; Yuniaristanto; and M. Nizam. Parametric [21], MY Abu; KR Jamaludin; and MA Zakaria [22], Fog [33], Erick Ten Bright [34], Katrin and Tatjana [35].…”

A case study on the application of activity based costing on the magnetic inductor

“…While in academic sector, there was a strategic management as marketing information by implementing ABC method in a technical college in Bekasi, Indonesia (Hidayat and Prasetyo, 2020). Surprisingly, Zheng and Abu (2019) implemented ABC in the palm oil plantation while the distinctive pattern of crankshaft and the critical and non-critical parameter of crankshaft which defined by Mahalanobis Taguchi System was developed in Abu et al (2018), Nik Mohd Kamil and and Abu et al (2017). Then they applied ABC as a method of estimation for the remanufacturing cost of crankshaft.…”

Constructing a new cost structure using time-driven activity-based costing for replanting at palm oil plantation

“…Costing based on activities is an approach proposed by Cooper and Kaplan. The estimate of cost of products and services is more accurate, in particular when it consists of a section of human activities and activities in a certain center [2]. They include mapping process and identifying value-adding activities, analyzing the costs of these activities and using cost drivers that were developed [3].…”