Publication Details
Abstract
This paper measures production performance at a battery firm by analyzing their production processes through The Performance Focused Activity-Based Costing (PFABC). This paper responds to a real business problem found at a firm manufacturing company when costs allocated by using a traditional costing systems can create misleading measures on the consumption of resources by the operations thereby obscuring their analysis and management of organizational performance. Based on a single-case explanatory applied research design, relevant costing, operational, and processes data were gather from multiple areas of the manufacturing of batteries. A PFABC model was constructed at the manufacturing processes and operations, using its relevant activity definitions. Resource consumption actual, standard and usage patterns were analysed, and the implications of any variation on per-performance analysis and managerial decisions on the processes within battery manufacturing company are discussed. Results indicate that PFABC is able to offer more detailed information and provide a better-decision basis than the conventional costing for the production manager, particularly in the understanding, managing, and control of cost of high-cost activities, non-value adding processes, bottle necks, as well as process and resource capacity on the production cycle. Significant cost difference and perform variance on some activities such as procurement activities, mixing, coating and formation and quality check have been investigated. Implications derived from this study for manager, policy making and future investigation are recommended as well. This paper extended the use case of the PFABC methodology for the battery industry; also, it provides insight on how a management accounting tools can be used to help production decision in the manufacturing companies.