Development of an Activity Based Costing Model for Almimi United Company for Wood and Trading رسالة ماجستير

Abstract

The objective of this research is to improve the quality of measuring cost, price, and profit of various products at Almimi United Company for Wood and Trading (AUCWT) through the application of Activity-Based Costing Model, to provide the company with more accurate costs and prices that have a direct effect on its profitability, competitiveness, and market share. This study developed an Activity-Based Costing (ABC) Model for AUCWT, which is a retail store for different kinds of wood. A step by step approach was followed to implement ABC including collecting cost data, identifying the main activities performed at AUCWT, calculating the cost of each activity, computing the activity-based overhead rate, and finally calculating the cost of each m3 of wood. The results of ABC implementation were compared to the costs and prices calculated using the current costing system at AUCWT. This research has contributed immensely to improving the quality of the pricing process of AUCWT through a more accurate calculation of the cost of 247 products, which are located in the natural wood warehouse at the AUCWT Ramallah's branch. Moreover, it helped AUCWT’s management to have a better understanding of all the processes involved in the purchasing, receiving and inspection, storing, selling, preparing orders, loading products, and delivering the materials to customers. This would help AUCWT management makes better decisions with regards to product pricing and customer profitability at any time in the company's lifetime.